Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Orders of the Day — NATIONAL INSURANCE AND SUPPLEMENTARY BENEFIT BILL

As amended (in the Standing Committee), considered.

New Clause 1

AMENDMENT OF NATIONAL INSURANCE ACT 1965

"In section 36 of the Insurance Act 1965, there shall be added the following subsection:

"(8) For each unit of graduated contributions paid or treated as having been paid before 6th April 1972 in respect of which graduated retirement pension is payable to any person under subsection (1) of this section, additional graduated pension shall be payable to him at the following weekly rates:

Income tax year in which payment of the unit of graduated contributions was completed
Weekly rate of additional graduated pension


1961–62
3½p


1962–63
3½p


1963–64
3p


1964–65
2½p


1965–66
2p


1966–67
2p


1967–68
2p


1968–69
1½p


1969–70
1p


1970–71
1p


1971–72
½p"


—[Mr. O'Malley]

Brought up, and read the First time.

11.5 a.m.

Mr. Brian O'Malley: I beg to move, That the clause be read a Second time.
The graduated pension scheme introduced in legislation by the Tory Government in 1959 is as mean, unjust and unfair a scheme as anything that could be found in pensions anywhere. Although pension schemes, both public and private, are not well understood by large sections

of the community, there is clear public awareness of the essential nature of the Boyd-Carpenter scheme. Throughout the country it is known as "the graduated pension swindle", and with some justice. The purpose of the clause is at least partly to try to rectify what is a public scandal. Its purpose is to increase the return on graduated contributions in a manner consistent with good pensions practice.
Before explaining the amendment and the background to it, I want to make one request of the Under-Secretary, arising from the clause. When I was considering the subject matter and the drafting of the clause, I turned for information, as one always does, to the latest annual report of the Department of Health and Social Security. The latest report is that for 1971, published as Command Paper 5019 in July 1972. In that report there is practically no information a bout the operation of the graduated pension scheme. There is a brief description of the scheme, but in the statistical tables in the appendices there is no information about the operation of the scheme—for example, the levels of pensions being paid out to pensioners as a result of their payments into the graduated part of the scheme. I am not surprised at that, because it is such a bad scheme. One finds from figures which one can work out for oneself just how meagre are the benefits in the graduated scheme for the contributions that are made.
I put in a very strong request on behalf of the Opposition that when the next annual report of the Department is published it should contain full statistical information about the operation of the graduated pension scheme introduced by the Conservative Government in 1959.
If the flat-rate national insurance pension, which is partly paid out of graduated contributions, had been set at a reasonable level by the present Government to meet the problems of pensioners at a time when prices were rising steeply day by day, it would have been possible to argue that the return on graduated contributions was being met in that way. But that is not the case. The background to this amendment is that throughout this Government's period of office they have handed hundreds of millions of pounds to the better-off—to surtax payers—and have


done very little for pensioners. In the Budget debate on 8th March of this year the Secretary of State was forced to admit that if the 1971 and 1972 upratings brought any improvement at all to pensioners, that improvement was, at best, marginal.
The proposed 1973 increase for retirement pensioners, which forms part of this Bill, is being eroded even before it is paid by rises in food prices, currently running at more than 20 per cent. a year. By October 1974, before the uprating that one would expect in the autumn of that year, it is likely that the flat-rate retirement pension at the level proposed in this uprating will represent the lowest percentage of average national earnings at any time in the post-war period.
We can look forward further than that. The Social Security Bill has a financial structure that offers a flat-rate pension to retirement pensioners at only about current levels, in real terms. In those circumstances, we are entitled to examine and try to improve the graduated pension scheme to give better benefits to people who are expected to manage on a flat-rate national insurance pension which, in real terms, is being eroded and reduced in value day by day.
I am not proposing a formula that was not put forward by the Labour Government. Indeed, in the National Superannuation and Social Insurance Bill in 1969 there was a firm proposal to dynamise the graduated contributions.
I shall explain the purpose of the clause for the convenience of the House. Currently, men and women making graduated contributions receive, on top of their flat-rate national insurance pension, an additional pension of 2½p for every £7·50 paid by a man and 2½p for every £9 paid by a woman.
The purpose of the clause is clear. It aims to provide some dynamism along with the movement of male average earnings, which is in accord with good pensions practice. For example, for contributions paid in 1961–72 there would be a payment of not only 2½p in graduated pension but an additional 3½p, which represents an upward movement with average earnings during those years. The House does not need to be reminded that the value of the pound has dropped

enormously in the period between 1961 and 1973. Indeed, in 1973 the pound, in real terms, compared with 1961, is worth only 57p. Putting the equation the other way round, in 1973 one would need £1·75 to buy what could be bought for £1 in 1961. So, unless we dynamise these graduated pensions, the 2½p in 1961 is worth less than l½p in 1973. It is likely, on any reasonable estimate of what will happen in future, to be ½p by 1985, and by the 1990s, when large amounts of graduated pensions will still be being paid out, the old sixpence in the 1960s, or the 2½p in the early 1970s, will be worth a quarter of 1p or even less.
Clearly, there is a need to give pensioners who have an entitlement for their graduated contributions a better return on their money. Indeed, because there was such a bad return on their money, the public quickly realised that the Boyd-Carpenter graduated pension scheme was rightly described as a swindle.
We should be concerned particularly with those who have already retired and have tiny pensions from their graduated contributions, and those who are near retirement and have no occupational pension whatsoever. We must give first consideration to that large group of men and women who are not contracted out of the graduated pension scheme and who, for any little addition to their national insurance pensions, have to depend on the contributions that they have paid from their incomes of between £9 and £18 a week during their working years.
It may be useful to give some examples of how small are the pensions which can be and have been earned under the Boyd-Carpenter scheme. Taking the 11 years covered by the clause, a man who was not contracted out and was therefore making contributions of over 4 per cent. from his reckonable earnings of between £9 and £18, would today he in receipt of a graduated pension of about 80p. The situation is worse for a woman. She would be receiving about 62p. The widow of a man who had paid such contributions would receive half of what the man received—about 40p.
Another example is that a man who had been on average male earnings throughout the period 1961 to April 1973


would be entitled to an additional pension of £1·17 per week, and his widow would receive only 58p. The effect of the clause would be to give an extra 60p to the man on average male earnings paying into the scheme from its introduction until April this year.
11.15 a.m.
In good private occupational pension schemes there is always provision both for pre-award and post-award dynamism. Therefore, we are bringing into the graduated pension scheme the better features of good occupational pension schemes and introducing the same kind of dynamism that we want to see in the flat-rate national insurance scheme.
It is good that even this Government have been driven to abandon the graduated pension swindle by 1975; but merely to abandon it is not enough. Far into the future large numbers of men and women, many of whom have not been contracted out and had the good fortune to be in good occupational pension schemes, will be dependent on the graduated pension scheme which, as it stands, will give small or even smaller benefits by erosion of the value of the fixed pension that they have earned. Therefore, there is an urgent need to help both the present generation of retirement pensioners and those who in future will have to depend largely on this graduated element for a small addition to the flat-rate national insurance pension.

Mr. Sydney Bidwell: I rise briefly to support my hon. Friend the Member for Rotherham (Mr. O'Malley), to seek to anticipate the kind of reply that I think we shall get from the Government, and, I hope successfully to puncture it and get serious consideration of the proposed clause.
It is worth recounting the history of the graduated pension scheme. After a speech by my right hon. Friend the Member for Coventry, East (Mr. Cross-man) at a Labour Party conference in the 1950s, we had, during the pre-1694 period, what my hon. Friend has described as the Boyd-Carpenter scheme in an answer to the national superannuation ideas then current in the Labour Party. I recall that my right hon. Friend the Member for Coventry, East had a tremendous ovation at that conference for the ideas that he was then expounding, because he showed that two-thirds of our

old people had virtually been shut out of decent occupational pension schemes. Thus, we had the graduated pension coming in and, as my hon. Friend said, it was an absolute swindle.
Why did it earn that title? It was because the benefit was so poor in relation to the amounts paid in. If we compare the value of the contributions with the extraordinary rises in the cost of living we see that it is an even bigger swindle. The Under-Secretary will no doubt ask why we consistently refer to this as a swindle, since a Labour Government operated it between 1964 and 1970. All I can say is that we were conscious of the swindle, and on the back benches, at any rate, were aware of the delay in getting down to the brass tacks of introducing new pension arrangements.
I hope that the Minister will not clutter up his mind with this kind of political argy-bargy. The present pensions are quite inadequate—£6·75 rising to £0·75. They are particularly inadequate in view of ever rising food prices, especially protein foods.
The Conservative Government's scheme was designed to pressurise employers and employees to opt out of the graduated pension swindle and get them into better occupational pension schemes. Such schemes may be the music of the future but the next Labour Government will put the emphasis on State provision based on earning entitlement. We may not go along quite the same path as West Germany and other European countries.
The comparable economy is that of West Germany, and that leaves us standing.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean): The hon. Member for Rotherham (Mr. O'Malley) began by speaking of a swindle in describing the graduated pension scheme. His hon. Friend the Member for Southall (Mr. Bidwell) repeated the phrase. I remember very well the reprimand which those using that phrase received from the right hon. Member for Sowerby (Mr. Houghton). No one is more expert on pension matters than the right hon. Gentleman. What he said was that any politician who uses the word "swindle" was doing grave damage to pensioners, because they were confusing the issue. I much regret that the hon.


Gentleman has not succeeded in getting out of his old ways and has not taken the wise advice of his right hon. Friend.

Mr. O'Malley: The hon. Gentleman is right—and I admit it at once—that my right hon. Friend the Member for Sowerby (Mr. Houghton) said that he had never described this as a swindle. What he did say was that if anyone in the City had tried to run such a scheme he would have found himself in prison.

Mr. Dean: The right hon. Gentleman made it quite clear, as have Governments of both parties, that every penny that goes into the scheme through graduated contributions is used for the direct benefit of pensioners and other beneficiaries. To describe that sort of arrangement as a swindle does not help pensioners to understand the real problem.
One of the objects of the scheme was to try to ensure that more money came into the scheme, so that higher pensions could be paid. One of the fairest ways of doing that was to ask those with a higher level of earnings to pay rather more than those with a lower level. It is sad to hear the Labour Party arguing against that. We have carried that a stage further in another Bill going through Parliament. This will mean a much fairer distribution of the cost of pensions among the working population. It will remove the regressive element, which means that the lower-paid pay into the scheme a greater proportion of their earnings than do the higher-paid.
I am surprised to hear the Labour Party arguing against what I would have thought was an elementary aspect of social justice—they would probably prefer to call it redistribution. The hon. Member for Rotherham went on to say that the Government had done little for pensioners. He knows that that is unfair. This Government introduced annual reviews of pensions—the first Government ever to have done so.

Mr. Dennis Skinner: Under this Government there should be a review every month.

Mr. Dean: For the first time ever, each winter pensioners will know that their pensions will be increased at least enough to compensate for the rise in prices over

the past year. I need not labour the record——

Mr. Skinner: No.

Mr. Dean: —except to quote the figures. I am sorry that the hon. Member for Bolsover (Mr. Skinner) does not want to hear them. When this Bill comes into operation the rate of pension will have been increased by no less than 55 per cent., while the figure for the cost of living increase is 26·3 per cent. This is a substantial improvement in the value of the pension. The hon. Member asked me for further information about the graduated pension scheme. The annual report is now a document of formidable length. We must be careful not to get it so big and unwieldy that it no longer serves the purpose for which it was intended.
The amount of graduated pension earned by a man reaching the age of 65 at the end of April 1973 and having paid the maximum rate of contributions throughout would have been £1·30. In November 1972 the average weekly amount of graduated pension received by persons entitled to it was 25½p for men and 11 p for women. This is in addition to the basic level of pension which, if the Bill is passed, will rise to £7·35 at the beginning of October for a single person and £11·90 for a married couple.
The proposal in the new clause is broadly to dynamise the graduated pensions.

Mr. Bidwell: Are the figures that the Minister has just given related to what the single and married pensions will be October? If so, his figures are not correct.

11.30 a.m.

Mr. Dean: The figures that I have just given are what the pensions will be when the increases in the Bill come into operation in October.
The proposals in the new clause to dynamise the graduated pensions cannot be considered in isolation. We have to consider the background against which the contracting-out arrangements were formulated, and clear statements made by Ministers at that time. It was on the basis that graduated pensions would continue to be paid in the money terms in which they were earned that employers decided whether their employees should


be contracted out. It would be wrong to change the terms retrospectively.
When graduated pensions were introduced the undertaking was given that no employee who was contracted out would be worse off as a result. To increase the graduated retirement benefit now would be to break that undertaking and would be unfair to those employees who were contracted out.
It is true, of course, that some who were contracted out at the time and who are contracted out now are members of occupational schemes that provide some increase in the pension after award, but this is certainly not the case by any means for all these people and there is therefore no guarantee that these occupational pensions would be increased, if at all, to the extent proposed in the new clause.
The hon. Member referred to an earlier Bill produced by his Government, but the original decision of that Government was precisely the decision that this Government have made. It was only after outside pressures were exerted on them that the previous Government changed their plans in this respect. So it is significant that their first proposals were exactly those that the present Government have introduced.

Mr. O'Malley: The pressures on the last Government, when I was in the hon. Member's job, were strongest from some people who were running poor schemes, who objected to the Government's political decision to dynamise the graduated contributions—precisely what the new clause would achieve. Some of the representatives of those schemes, of which any decent employer would have been ashamed, came to see me on precisely this matter. They were the people who were putting pressure on. The conclusion to which we had to come was that the prime responsibility of the Government was to give justice to the people who were still in the Boyd-Carpenter scheme and were being given an appalling return on their money.

Mr. Dean: Whatever the reasons for the previous Government's change of policy, I am merely saying that they changed their policy. Their original decision was the one that we have made, for the reasons that I have explained.
The Government clearly stated their policy nearly two years ago in the White Paper "Strategy for Pensions". That policy was then formulated in the Social Security Bill at present before Parliament; the reasons for the policy were clearly set out at that time, and many occupational pension schemes have of course planned accordingly.
Whatever anyone may feel about the pros and cons of the argument, to go back on a decision clearly announced nearly two years ago and put in legislation now well on its way through Parliament would be extremely bad and unsettling for occupational pension schemes which have now made their plans and arrangements on the basis that the Government will do what they said they would do.
Stability in occupational pension schemes is badly needed and has been badly lacking in recent years. That is another strong reason against this eleventh-hour proposal. Planning in occupational pension schemes is very much a long-term business. One cannot expect them to be able to plan improvements for their existing pensioners and for the members of their schemes who will become pensioners in future if the Government are constantly changing their minds and unilaterally changing the contracts that they made earlier on the basis of which schemes made their decisions. These are powerful reasons against the new clause.
Another reason is the cost. It is estimated that the new clause would cost £30 million in 1974–75, rising to £45 million in 1980. This, of course, would be on top of an additional cost for pensions and other benefits of about £570 million, which has to be found by the contributor and the taxpayer. All this would go to the better-off pensioners—those with earnings above a certain level who have been contributing to the scheme. Here, also, one has to consider priorities when dealing with such large sums. It is for these reasons that I recommend the House not to accept the new clause.

Mr. William Hamilton: I was not on the Committee and therefore did not hear the arguments there, but I have listened carefully to the Minister and my hon. Friend the Member for


Rotherham (Mr. O'Malley), and on balance I thought that my hon. Friend had the better of the argument.
Whenever I hear any Government plead in aid the cost of a proposal, I try to put it in other perspectives and think of other things that have cost much more than the proposal would cost and are far less worth while. I need not name them now, but I could give a long list of things on which the Government have not hesitated to spend £30 million, £40 million or £50 million and which are much less worth while than this proposal.
We have heard ad nauseam the argument about the alleged swindle that was maintained by the Labour Government. We regret that we did not produce our scheme much earlier in the 1964–70 Parliament and get it into law before the 1970 catastrophe. But that is past history. We still believe that it is a swindle and we maintain that when we get a Labour Government, as we shall at the next election, we shall take steps somehow to absorb this into our new scheme.
It is not realistic to talk of abolishing a scheme that has been in existence for 12 years or so, but how the Government can defend a scheme in which the benefits and contributions remain the same after 12 or 13 years, when they have been at great pains to shout from the rooftops how they have sought to protect all sections of the community from inflation, astounds me. It does not stand up to rational argument.
If one works out the simple arithmetic, a contribution of £7.50, giving 2½p per week extra pension, means that a person has five years or so of pensionable life before he even gets his £7.50 back. These sums are derisory. Inflation has meant increased wages—and the Government quote as a merit the fact that wages have gone up more than food prices and more than the retail price index as though it were their declared intention to see that that happened. In fact, they do all they can to stop from happening what they quote as an example of their success. They say to the unions, "You must not have this substantial wage increase, but we accept all the plaudits going because we can prove by statistics that wages have gone

up a lot more than prices in the period that we have been in office." Higher wages are what the Government's whole policies are designed to stop.
Meanwhile, however, the pension situation has remained static. As wage levels rise, more and more people are brought into the graduated scheme and more cash is collected. Yet the 2½p remains the same. So the sums are getting more and more indefensible.

Mr. Sydney Bidwell: With the average male expectation of life, an enormous number of people will never live the five years to get their contributions back.

Mr. Hamilton: Of course that is why from the beginning we called the scheme a swindle. It was blatantly apparent that the scheme was simply another tax to finance the existing national insurance scheme without increasing contributions sufficiently to maintain the increase in pensions in the way that pensioners needed. This was an ill-concealed additional tax taken from the higher-paid workers rather than surtax payers and the rest. The more honest thing would have been to increase direct taxation on the higher income groups. In fact, the reverse has happened under this and previous Conservative Governments.
When the Government talk about sanctity of contracts one need not remind them that I criticised the Child Poverty Action Group on one occasion after the last election because it was so naïve as to believe what Conservative leaders were saying—that they would increase family allowances. The Child Poverty Action Group said in 1970, "We believe Mr. Heath—he is a jolly good lad. We will see he gets power." He got power but did not do what he promised. Let us have no talk about the sanctity of contracts or promises. We shall debate next week in another context another legal provision whereby we shall retrospectively renege on a contract made to certain individuals.
11.45 a.m.
The Government will have to think about how to protect pensioners. It is not a sufficient argument to say that this provision will benefit the higher paid. Since when was this Government's conscience troubled by the fact that more help was going to those who deserve it


least? That is what all the Budgets since 1970 have been about. They all gave help to those who needed it least. That is the great trouble. That is why the country is in such turmoil.
For the Government to parade figures attempting to show that old-age pensioners have never had it so good and that they are better off than ever before is contrary to all the post that I get on pensions. I do not think any Member on this side of the House gets any letters from pensioners saying how well off they are under this Government and long may it last. On the contrary, one gets letters pleading poverty from people scraping around and trying to get another 10p or 20p from the Supplementary Benefits Commission.
All we are trying to do by new Clause 1 is give protection to a relatively small number of our people who have been badly treated and have had no account taken of their position in the last 12 years, when every other section of the community has had some steps taken either by their trade unions or by the Government to protect them from inflation. These people have not had such steps taken for them and it is time something was done for them.

Mr. Marcus Worsley: Hon. Members opposite have frequently used the word "swindle". The pension scheme introduced by the Conservative Government in 1958 was, I believe, based on a false premise—that one could have a viable national insurance scheme with a procedure for opting out for some members of the scheme into occupational schemes. The Labour Government, when they eventually produced their pension scheme in 1970—the hon. Member for Fife, West (Mr. William Hamilton) was right in saying that it took them an eternity—fell into precisely the same error. The Crossman plan, as it was called, tried to do precisely the same thing.
The great merit of what the present Government have done is to break away from the opting-out provision. We have two pensions now, the basic State pension without opting out, and a pension above that, either occupational or under the funded State Reserve Scheme, which does not merit the criticisms which have been made of it.
I have a great deal of sympathy with what the hon. Gentleman said about what has happened to the graduated element under the 1958 Act. But once a bargain has been made—and my hon. Friend the Under-Secretary of State was right to say this—when one has built up all sorts of expectations and when the opting out and opting in have taken place on a definite and stated principle, which was the case, one cannot retrospectively change the basis. This is why the Government are right, despite forceful arguments to the contrary, to stick to their guns on this matter, and it is why the Labour Government initially were right in taking the same line.

Mr. O'Malley: I would like to correct one error which has crept into the debate. The Under-Secretary of State made the same comment as the hon. Gentleman has just made. The 1964–70 Labour Government did not originally make the decision that the graduated pension arrangements should stand. They drafted a completely new pension scheme in which the graduated pension scheme was considered with all the other alternatives. They then decided to do two things—first, to abolish that scheme and, secondly, to provide dynamism for the people who had to depend on that scheme for a little additional income on top of their flat-rate benefit.

Mr. Worsley: Of course I understand that the Labour Government wished to abolish the scheme, but originally they did not wish to "dynamise the bricks"—I am glad that the hon. Gentleman did not use that jargon. I understood that the initial proposition was that it should not be dynamised. If I am told that I am wrong, I accept the correction. It was my understanding that the Labour Government changed their attitude under pressure.
I return to my point that once a bargain of this sort is struck it must be kept. However, looking back on it, I believe that it was an error to have made a bargain quite of this kind. I repeat that the Labour Government, in the plans that they stuck to, the plans that they eventually put to the House, intended to make just such a distinction once more, just such an opting out.
Therefore, all of this debate underlines the Government's wisdom in the basic


structure of the new two-pension scheme. Therefore, the real moral of the tale is that the Government have got their pension structure right and that the Labour Party continues to make the mistakes of the past which occurred in the Crossman scheme.

Mr. Michael Meacher: The core of the argument in this debate is that the 2½p payments per unit of graduated contribution will be so decimated by inflation that, as my hon. Friend the Member for Rotherham (Mr. O'Malley) has put it, it will be down within a decade from 2½p to probably less than ½p and to a miniscule amount by the time that the final recipients get this graduated pension.
To that argument—it is an argument which the hon. Member for Chelsea (Mr. Worsley) said is entirely justified as it stands—the Under-Secretary has made no reply. I will come on to what the Under-Secretary said, but what he said did not relate to this crucial point.
The first point the Under-Secretary raised was that earnings-related contributions were being introduced entirely for flat-rate benefits. As the hon. Gentleman knows perfectly well, that is totally irrelevant to the point of the amendment. Moreover, he should know perfectly well, if he is challenging us on redistribution, that the redistribution formula within the Crossman scheme would have been a great deal more distributive. That is entirely irrelevant to the point of the debate.
The Under-Secretary went on to talk about the annual review, which is a further red herring drawn across the trail. However, as the hon. Gentleman mentioned it, I put it to him that he knows full well that the Government reluctantly introduced it only when we had reached a sky-rocketing level of inflation and no other course was open to them. The hon. Gentleman knows that. It would not have been introduced had we not had a level of inflation going up to 10 per cent. and more and the Government would not have protected pensioners otherwise.
The argument was made for us by the hon. Gentleman when he said that the average level of the graduated pension

payments was 25½p for men and 21p for women. That is a very forceful point. It is of course a point for us, a point which makes clear how minute this already is, what an extremely poor scheme it was, what a swindle the scheme was, and, unless this kind of protection—inflation-proofing—is introduced, what an awful swindle it will be as the rate of inflation has increased in the 1970s over the rate in the 1960s.
The main argument which the Under-Secretary saw fit to introduce in resisting the amendment was that the dynamising of the Boyd-Carpenter scheme could not be taken in isolation. He said that some employers at least would be in difficulties if the undertaking were broken that members of their schemes would get only the money value for the contributions paid in under that scheme.
That is precisely the argument which sacrifices the Boyd-Carpenter pensioners to the interests of the private schemes. That is precisely what the hon. Gentleman is saying. It is precisely the argument against a structure with a very poor State scheme to induce reluctant employers to set up minimum benefit private schemes. This situation arises. It has arisen again under the Social Security Bill. There is some minimal protection there.
Under this scheme, which was the first time that this was tried, there was no protection and we are unable to have retrospective protection on the grounds that it would damage sanctity of contract, that it would embarrass some employers who have set up very poor schemes and if the State scheme were even minimally improved it would mean that those employers would be in difficulties: either they could not pay out or they could not pay out in full the small extra payments which would have to be given in all fairness, as the hon. Member for Chelsea said, to those whose payments are very small now and are getting smaller every year.
The only other point that the Under-Secretary made concerned the question of cost. He said that the cost would be £30 million now rising to £45 million. He also made the rather curious remark that the benefit would go only to the better-off pensioners.
I point out to the House that this is a totally inaccurate argument. As the scheme was originally introduced, graduated contributions were paid on the earnings range of £9 to £15. It was raised to £18 and then to £21 and it has been successively raised since. In other words, it is precisely the broad bracket of virtually the whole of the working class up to the level of the average pay of higher-paid skilled workers and excluding only a few of the lowest-paid unskilled workers that this scheme has been deliberately aimed at, and contributions were not demanded on a graduated basis from salaried workers who were at a much higher salaried level. It was precisely the broad bracket of ordinary workers who paid towards this. It is they now, if they were not contracted out, who are to be deprived.
The essence of the debate centres on the inadequacy of a pension structure which is geared to a very poor State scheme which cannot be improved because of the fear of undermining minimum benefit private schemes. The pensioners who are locked into this poor State scheme are sacrificed in the interests of getting more employers to set up more private schemes because that is in the interests of the private insurance industry. That is the key to the debate.
One can see the Government's embarrassment. They are locked in a situation where they admit the justice of the argument, but for the sake of their friends in the private insurance industry they cannot get out of this situation. It is a situation which will recur under the Social Security Bill where the dynamising formula for minimum benefit private schemes under that Bill is almost certainly inadequate given the levels of inflation which we have been having in recent years, and I predict that we will be having this kind of debate in future years over the next decade if that Bill comes into operation.
Therefore, it is quite clear that the Boyd-Carpenter pensioners are being swindled out of a decent pension scheme because the Government have locked themselves into this extremely unsatisfactory pension structure. It was a swindle before. It is becoming an even bigger swindle as a result of the Government's failure to accept this moderate amendment.
Although I can see the Government's difficulties, given what they have done, I hope very much that they will be prepared to reconsider the fact that they can at least provide some improvement—some uprating—for those who have found themselves in this situation, which is not of their own making and which they were not warned about.
The Bill was not introduced in 1959 on the basis that there has to be stability in the Government's thinking on pensions and that there would be a Social Security Bill very many years later. The Government should not have got themselves into this situation in the first place. This is the real pith of the argument.
Even if this formula, which would give minimum protection to the Boyd-Carpenter pensioners, cannot be accepted, I hope the Government will be able to think of other ways in which they can protect the pensioners whom they are sacrificing to their own political interests.

Question, That the clause be read a Second time, put and negatived.

Schedule 4

AMENDMENT OF SCHEDULE 2 TO MINISTRY OF SOCIAL SECURITY ACT 1966

12 noon

Mr. Alec Jones: I beg to move Amendment No. 1, in page 15, line 28, at end insert:
'3. After paragraph 5 of the Schedule there shall be inserted the following:
5A. In determining whether benefit shall be paid under section 7 of this Act to meet the whole or part of the cost of a funeral, no regard shall be had to the duties of local authorties under section 50(1) of the National Assistance Act 1948.".'
I prefer the Under-Secretary in his more conciliatory mood when he is in Committee to his more public mood on the Floor of the House.
This amendment relates to the death grant—a subject that many people find distasteful, but that nevertheless is of great importance to so many people. The death grant is one of the two lump sum benefits paid under our National Insurance Scheme. The background to this amendment is that the lump sum payments, the death grant and the maternity grant have not retained the value that they had when they were introduced in 1948. The Minister is aware that he, I


and many other hon. Members participated in a series of debates in Committee dealing with this problem of the death grant. In our deliberations in Committee two issues seem to have arisen concerning the death grant—first, the completely inadequate level of the grant at the moment and, secondly, the diverse powers of local authorities and the Supplementary Benefits Commission in meeting or helping to meet funeral expenses.
In this amendment, which is a modest one, we are not seeking to increase the level of the grant. The purpose of the amendment is to allow the Supplementary Benefits Commission to make payments to cover funeral expenses without having regard to the powers of local authorities, so that the commission will not be inhibited by the fact that local authorities have certain powers concerning the disposal of bodies.
A death in the family or, indeed, in a close circle of friends is usually a time of considerable grief and distress, but for many of our fellow citizens, especially the poorer members of society, to this grief we add considerable financial hardship, because for many of these people the cost of a funeral is more than they can bear. We have to accept that many such people find difficulty in meeting funeral expenses. The exact numbers are not known, but in trying to estimate numbers we should have some regard to the fact that there are about 3 million people on supplementary benefit and about 2 million marginally above the supplementary benefit level
In Committee hon. Members on both sides gave examples of cases, from their own constituencies, of people having to make a choice. Either they were trying to meet excessive funeral costs, which were running them into considerable debt with undertakers, or they were forced to accept the pauper's funeral which hon. Members on both sides of the Committee agreed was more in keeping with Dickensian times than with 1973.
The fact that clearly emerged—the Minister conceded this point in Committee—was that the present death grant just will not meet the cost even of a minimum standard funeral. The grant was £20 in 1949; it rose to £25 in 1958 and £30 in 1967, and there it has re-

mained frozen. Whilst the grant has remained at the ridiculously low level of £30, the agreed maximum charge for funerals of a minimum standard—the figure was given by the Minister—has risen, in 1972–73, to £69·75, which means that the present level of grant is less than half the cost of a minimum standard funeral. This example is used to illustrate the considerable hardship that such a situation imposes on many people.
In Committee the Minister said that in cases of death the family and friends are often willing to help pay such funeral expenses. That is true in many cases—probably in the vast majority of cases—but, nevertheless, I believe it is the responsibility of this House to cater for those cases where the family or friends with the best will in the world, cannot meet the normal funeral expenses. It is that group on whom we are concentrating our attention this morning—the small group who genuinely cannot meet normal funeral expenses.
If relatives of the deceased do nothing about arranging the funeral, they can rely on Section 50 of the National Assistance Act 1948, which empowers local authorities in such cases to arrange funerals and meet the costs. If the death occurs in a hospital, similar powers can be exercised by hospital management committees. But I think we should take into account the fact that such a procedure ignores the natural reluctance of relatives or friends to accept such a burial or cremation, for it means a pauper-type funeral.
In Committee my hon. Friend the Member for Battersea, South (Mr. Ernest G. Perry) told us that from his knowledge, paupers' funerals in London still meant that 10 or 12 bodies were buried in the same grave and that there was no provision for a memorial stone. Such a means of disposing of a body is completely insensitive to the feelings of relatives, and it lacks any dignity and respect for the deceased.
If relatives make a claim for supplementary benefit they are advised to go to the local authority. In fact, paragraph 108 of the Supplementary Benefits handbook, Administrative Paper No. 2, clearly states:
If therefore the Commission are approached for help before a funeral is arranged the person concerned will be told of the responsibility


placed upon local authorities and hospital management committees so that he can consider making an approach to the appropriate authority.
In other words, if such relatives, feeling that they cannot meet funeral expenses, make a claim for supplementary benefit, if they make it before the funeral is arranged they are immediately back to the pauper-type funeral, which lies within the jurisdiction of local authorities.
This amendment is a modest one. It does not seek to increase the death grant, much as we on this side of the House would like it increased. It does not seek to alter the criteria for judging a claim for exceptional needs payments by the Supplementary Benefits Commission. It would merely enable the commission to entertain a claim for exceptional needs payments for funeral expenses without taking into account the powers of local authorities or hospital management committees.
We are trying to make clear that the power of the commission to assist in the payment of funeral expenses should take precedence over the duty of the local authority to arrange a pauper's funeral. Our amendment would leave the commission entirely free to decide whether to help in a particular case, but it would, we hope, prevent the commission from refusing help on the grounds that the local authority has the duty to bury the person.
I recall that in Committee the Under-Secretary indicated that he felt that it was more important to give extra cash and a greater degree of priority to making provision for the elderly during their life. I accept that that is true to some extent, but it ignores the great importance that old people attach to having what they describe as a decent funeral. I know from my own family experience how the thought of having a decent funeral looms large in the minds of elederly people. Moreveover, I remind the Under-Secretary that the provision that we propose would make extra financial help available to people who are living at the moment—the relatives of the deceased, who are forced to bear an unreasonable burden.
It is not an earth-shattering amendment, but it would remove some of the heavy pressure upon our poorest people at the time of a death in the family and

would introduce more humanity and compassion not only for the dying but for the relatives who are left.

Mr. Ernest G. Perry: I am sure that the Under-Secretary of State realises that there is a good case for this proposal. As my hon. Friend the Member for Rhondda, West (Mr. Alec Jones) said, there is a long tradition in ordinary working-class families that when someone dies it is the family's duty to provide a decent funeral, and everyone clubs in, so to speak, to provide it. But I have in mind the position of the elderly childless couple who are over 75 years of age. They may have taken out small insurance policies many years ago—now paid-up policies, which will give the widow or widower a strictly limited sum in the event of the partners's death.
In such cases, the amount available from that source may be as low as £10, £20 or £30, which, together with what comes from national insurance, will not be enough to meet the cost of a funeral. I urge the Under-Secretary of State to pay particular attention to the position of elderly people with no children and to make an exception so that the Supplementary Benefits Commission may take such circumstances into account, without reference to what the local authority may do.
The Government have introduced a pension scheme for the over-80s. I am asking them to give special consideration now to elderly poor people in the circumstances that I have described, so that the Supplementary Benefits Commission will have power to provide the extra money that will enable people to avoid having to "go to the parish", as we used to call it, for a funeral. This still happens today, and it is not unusual for the body to be buried with several others in what is called a common grave when the widow or widower cannot afford a decent funeral. This may happen only where people are childless, but it is nevertheless a serious problem. I appeal to the Under-Secretary of State to ameliorate the sense of inferiority that is felt by the surviving partner in these circumstances.

Mr. Dean: When death occurs in a family, it not only casts a shadow of


sorrow but entails extra expense. We all understand that. In moving the amendment, in his usual responsible and moderate way, the hon. Member for Rhondda, West (Mr. Alec Jones) emphasised that factor, and added that his present proposal was far more modest than was the amendment moved in Committee. All he wishes to do today is to concentrate on the powers of the Supplementary Benefits Commission and local authorities.
In the circumstances, therefore, it is not necessary for me to say much about the wider issues, save to remind the House of the resources—including insurance of one form or another—that in many cases, though not all, are available within a family to ensure a decent burial.
12.15 p.m.
I fully accept the point made by the hon. Member for Battersea, South (Mr. Ernest G. Perry), that every family attaches enormous importance to ensuring that the burial and the associated arrangements are done in a decent and dignified manner. In most cases, fortunately, there are resources within the family. There are savings. There are insurances of various kinds, though admittedly at different levels. Here is one figure to illustrate what I mean. In 1971, no less than £245 million was paid out on insurance policies as a result of death. Over and above that, in many cases the younger members of families, especially when one of their parents dies, not only are able but positively wish to make a contribution towards the funeral expenses.
There is also the death grant through the National Insurance Scheme, to which the large majority of people in the scheme are eligible. As the hon. Member for Rhondda, West said, it has been the practice of Governments of all political colours to improve the death grant only at irregular intervals. One of the reasons why they have done that is that they have felt that, certainly on a regular basis, while people are alive it is better to improve the level of pension than of the lump-sum death grant.
This clash of priorities has considerable relevance, since the large majority of deaths occur among people over pension age. Inevitably, therefore, we have to

face the problem of priorities in this respect.
I turn now to the amendment itself, and I hope that what I have to say will assure the hon. Member for Rhondda, West that the purpose lying behind it can be met under existing arrangements. The intention of the amendment is that the Supplementary Benefits Commission should be required to ignore the duty laid upon local authorities and should consider making an exceptional needs payment in every case where help is sought, whether before or after funeral arrangements have been made.
The amendment is not necessary to achieve that result, since the terms of Section 7 of the Ministry of Social Security Act 1966 are very wide. The Act does not refer to the types of payment that may be made or to the circumstances in which they may be made. It gives the Supplementary Benefits Commission a general power to meet an exceptional need where it seems reasonable to do so. Thus, the Act does not refer specifically to funeral expenses, nor does it require the commission to have regard to Section 50(1) of the National Assistance Act 1948. It may well be that the hon. Gentleman had not appreciated quite how wide are the powers of the commission.
What is needed is a system that ensures that, in comparatively few cases where there is inability to meet funeral expenses, there should nevertheless be decent, humane and acceptable arrangements for the funeral. One way to achieve this is through local authorities. The hon. Member for Battersea, South pointed out the disadvantage of those arrangements. In few cases today does this happen; they are very much the exception rather than the rule.

Mr. Alec Jones: If the Minister is saying that Section 7 of the 1966 Act is sufficient for this purpose—and reading this on its own would tend to support what the Minister says—will he say why it is necessary to have, in paragraph 108 of the handbook—which is an interpretation—that before approaching the commission for help in respect of a funeral the relatives should go to the local authority? If that instruction could be deleted I should have more confidence in the ability of Section 7 to meet the point.

Mr. Dean: I shall come to the hon. Member's point when I describe the changes that are envisaged. One course of action is through the local authority, but the commission has very wide powers to help where it considers it appropriate to do so. Therefore, where local authorities do not in practice help, the commission is certainly prepared to step in.
The hon. Member has asked whether the relationship between what the local authority does and what the commission does is right and, above all, sufficiently clear to the people concerned. I take his point on this. I shall draw the attention of the commission to it. However, the commission has been considering its arrangements, partly in the light of debates that we have had on earlier occasions, and, as a result, has recently reviewed the arrangements under which it helps in the unfortunate circumstances where this type of help is required. It has made a number of improvements.
For example, the commission will no longer expect relatives to help where one partner of a married couple dies. Nor will it expect the surviving spouse to seek the help of voluntary or charitable organisations before approaching the commission. So the commission has responded with these new arrangements. It is too early to say how they are working in practice, but I hope—and I can express a fairly confident hope—that they will go a long way towards dealing with the understandable anxieties that have been expressed about these difficult matters. I repeat, however, that I shall draw specifically to the attention of the commission the valuable points that have come out today as to the means of getting the right relationship between what the local authorities should do and what the commission should do, and also of trying to ensure that those people who might require the help of one or the other have information available to them when the critical moment comes.

Mr. Bidwell: I think I can sum up the feelings of myself and my hon. Friends by saying that what we have heard from the Minister provides a little ray of light and goes some way towards breaking the ice. We are grateful for even the smallest of mercies. My hon. Friend the Member for Rhondda, West (Mr. Alec Jones) spoke about the mood of the Minister

in the last debate, but on this occasion I found him at his cooing best. But if what he has told us about a re-think in the discretionary action of the Supplementary Benefits Commission were to lead to a re-wording of the hand-out booklet—which is the interpretation of the enactments and the powers of the commission—we should express our thanks.

Mr. Dean: The handbook to which the hon. Member refers is revised regularly because the scheme is changing and, we hope, being improved all the time. I have little doubt that when the handbook is revised the commission will wish to reflect in it the improved arrangements to which we have just referred.

Mr. Bidwell: I am grateful for that, but I underscore what I consider to be the weakness of the existing situation. The commission virtually requires an indication of moneys actually spent. I echo what my hon. Friend the Member for Battersea, South (Mr. Ernest G. Perry) said about the aged couple. It is also often the case that a long-lost relative who has not had contact with the family circle for many years—perhaps because the family is scattered, for example, in New Zealand or Canada— may have lived a life apart, yet may have a circle of friends who are anxious about the situation. It might be well-nigh impossible immediately to make contact with the remaining members of the family. In such a case, if the friends were in poor circumstances, what would happen about making provision for a decent funeral?
My hon. Friend the Member for Rhondda, West spoke clearly and pleadingly and alluded to the current rate of benefits for the death grant. I fear, however, that he did not show sufficiently clearly that in many cases the grant does not amount to £30, but varies considerably. For a child under the age of three it is about £9; for a child of three to five years, inclusive, it is £15; and for six to seven years, inclusive, £22·50—until one reaches the position of a man aged 18 or over, born on or after July 1893, who gets £30.
I accept that there may be criticism of both Governments that they have not kept pace with the Beveridge principle, which is that the rate of benefit should equal the basic rate for the minimum standard of funeral, which has been


accepted to be the cost laid down by the Funeral Furnishers Association. Certainly the figures quoted by my hon. Friend are very much out of date. I do not know what the funeral furnishers are currently charging, but certainly the figure he gave—£69.75—is not the current cost.
That is not the rate that has been charged to people of very slender means. The two things go together. The grant has not kept up with the Beveridge principle or with the cost of living. Anxieties have increased because, in the old monetary terms, the pound is now worth 15s. 10d. compared with its value three years ago. For this reason the Government must be prepared to provide help, in the matter of both the death grant and ensuring that the numbers of paupers' funerals do not increase.
The Minister has quoted a global figure of about £240 million paid in insurance death benefits under private insurance schemes. But an extraordinarily large number of people have turned in life insurance because they cannot afford to keep up the premiums. Bearing in mind the rate of inflation, I imagine that this is now happening on a growing scale.
12.30 p.m.
I am glad to hear what the Minister has said. I hope that this debate will lead to a wider interpretation, and a virtual instruction to the Supplementary Benefits Commission.

Mr. Alec Jones: In view of the conciliatory mood and words of the Under-Secretary, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Meacher: I beg to move Amendment No. 2, in page 16, leave out lines 22 to 42.
The amendment is concerned with the anomalous and unfair position whereby, until early this year, it was normal practice for the special allowances granted by the Supplementary Benefits Commission to be offset against the long-term addition. A scandalous situation had prevailed for too long, in which a penson—often a pensioner—was told that he was entitled to, and in need of, extra allowance, whether for heating, diet,

laundry or some other purpose, and then told that if this was less than 50p—or 60p as it now is—it was already being received by him through the long-term addition.
This was changed as a result of the Simper case, which came before the High Court. Part of the judge's judgment in that case was:
My interpretation of these regulations is that paragraph 4(2)(a)"—
that is, of Schedule 2 of the Ministry of Social Security Act 1966—
means that a discretion is to be exercised; that is to say it is intended that the person making a determination of the sum of money due should exercise a broad judgment to ensure that in fact there is no overlapping, but that he ought not to proceed simply on a rule of thumb that exact deductions should be made.
Despite that case, that has not so far happened. The Bill abolishes the long-term addition and creates three new rates in the schedule. So to include the long-term addition, paragraph 4(2) provides for the automatic offset of any exceptional circumstances addition against these two rates except in three cases.
I understand that this is entirely in line with the circular which the commission had previouly sent out to staff. The first is in regard to heating allowances; the second is in respect of non-householders who contribute more, in rent, than the 80p allowed in benefit; and the third is in respect of children who are awarded the exceptional circumstances addition. It certainly appears that once again the commission is operating a rule-of-thumb method, even though the High Court judge explicity recommended that that method should not be adopted.
By deleting paragraph 4(2) and (3) we seek to ensure that any award of an exceptional circumstances addition will increase benefit for the claimant, that diet allowances, laundry allowances and other special allowances, as well as heating allowances, will not be offset. I am sure that all hon. Members will agree that that is a very reasonable request.
The Government have been somewhat maladroit in their handling of the situation following the High Court case. First, they were pushed; they did not initiate this change. Schedule 4 is a reaction to external pressure. Secondly, they have done the absolute minimum that they


were virtually bound to do as a result of that case.
Will the Under-Secretary confirm information that has been given to me that the current practice of the commission following the High Court decision is to continue to offset even heating allowances against the long-term addition up to October this year? For reasons that need explanation and justification, it seems that even the decision of the High Court has been set on one side, at least till October.
Whatever the explanation, the Government have done no more than an absolute minimum. By making the change, with which we agree, they have opened up a glaring anomaly. Those that are awarded special heating allowances are in effect given preference over those awarded special allowances because of dietary needs, laundry costs due to incontinence, immobility, or anything else. There seems no clear argument in equity for the special heating needs being given that kind of priority.
That is the first argument for the amendment—that the Government are trying in the schedule to make a division where in equity no reasonable division can be made.
The second argument is that the freeing of the special allowance is limited to heating, and therefore only supplementary benefit claimants with extra heating costs alone will gain as a result of the Bill. Yet it is well understood by all persons who deal with the kind of claimants who repeatedly come before the commission that their needs are not so neatly compartmentalised as the change which the Government are making appears to indicate. They often interlock.
There is often a division of needs, especially among elderly pensioners, such as those suffering from incontinenece and a digestive disorder. Such people, who are in the greatest need, will gain nothing from the Bill, because the removal of the offset is limited to heating allowances.
To make the point forcefully it is worth giving a particular example. It is one that Members who served on the Committee will recognise, but I give it again because it illustrates the point very well. Mr. Clark, who is 78, and his

wife, aged 68, have been receiving supplementary pension since 1965 in addition to their retirement pension. Mr. Clark suffers from bronchitis, and also has a fractured spine. It was considered that the extra cost of a special diet was 40p a week, and that amount was regarded as a special expense. His wife suffers from bronchitis, asthma, emphysema and arthritis. In 1971 she suffered a coronary thrombosis. It was accepted that she should have a more expensive diet, the cost being 92p a week. This amount has been regarded as a special expense.
Secondly, Mr. and Mrs. Clarke are unable to do their own laundry, and they send it out at a cost of 40p per week. The normal requirements figure is intended to cover the first 10p of such a charge as all claimants have minor laundry expenses and only the balance of 30p has been regarded as a special expense. Mr. and Mrs. Clark are in poor health and need constant room temperature to be maintained day and night and the 90p extra heating allowance is regarded as a special expense. Their exceptional circumstances addition totals no less than £2·62 a week of which 50p is now offset. Mr. Clark has said,
I would appreciate a visit so that you could see for yourself the fix I am in".
He is particularly worried that he is unable to afford the fresh fruit and vegetables that his wife is meant to have.
The Bill as drafted gives Mr. and Mrs. Clark no relief. As the offset remains on their special diet and laundry expenses, the so-called freeing of their heating allowance is illusory. That is the powerful argument in favour of the argument.
The third argument for the amendment is that the Bill worsens the situation for those with special needs because the High Court ruling gives the Supplementary Benefits Commission and the tribunals discretion to ignore the long-term addition when awarding the extra weekly allowance, but the Bill places a duty on the commission to deduct the equivalent of the long-term addition. Now the commission will acknowledge, even more than before, that there is a special need to be met and then compel denial of full special relief.
I quote briefly a further case to show how extremely limited is the concession


made in the Bill and how those in considerable need will get no relief. Mrs. Lamb is a house-bound widow of 77. She used to receive heating allowance of 40p a week, but this was withdrawn after a home visit by an officer of the commission. She suffers from a bad heart and arthritis. She has had 12 pacemakers inserted in her heart in the past eight years and has to have a high protein diet—eggs, cheese, meat, fish and so on. When she was visited last year her legs were swollen. Since the commission does not state how much of the basic living allowance is allowed for food costs, it is normally difficult to argue about the adquacy of the diet allowance. I stress that problem. We should know much more about how much of the basic allowance is allotted for particular conditions so that we may know how much extra people are getting.
Mrs. Lamb receives only 40p a week extra for an expensive diet and another lop for laundry. The long-term addition is offset against the exceptional circumstances addition, and that situation will continue under the Bill. The result is that in comparison with a healthy pensioner of the same age who does not suffer from the severe afflictions of Mrs. Lamb her extra needs are not catered for.
12.45 p.m.
Those are powerful arguments for the amendment. I put forward one more argument, which the Government have sought to make their own in their handling of social security matters in the last three years, namely, the concentration of the greatest help on those in greatest need. It is difficult to think of people in greater need than the people in the cases that I have quoted. Yet, in many cases, if they have diet or laundry needs which are no greater than those allowed for in the 50p allowance per week, they gain nothing. The freeing of the heating allowance under the Bill aids them not at all, as there continues to be an offset against other exceptional circumstances additions.
In view of the Under-Secretary's ideological position and the argument which he has tried to make his own, but which he puts forward sincerely, I hope that he will agree that to allow the Bill to go through in its present form will

deeply contravene the principle that those in greatest need should receive the most help.
I turn to the arguments put forward in Committee, designed to show why an amendment of this type is not acceptable. The first was that in allowing the removal of the offset for heating allowances the Government are going for priority needs. I hope that I have said enough to make it clear that, because needs are interwoven and are not compartmentalised in the way that the Under-Secretary may like to make out, the assertion that the Government are giving priority to those in greatest need does not apply, as many people with heating needs will also have other needs and other exceptional circumstances additions and, as a result, will gain nothing. Therefore, the priority argument is entirely inapplicable because of the interlocking of needs, as is often the case among those in greatest need and the most elderly pensioners.
The second argument put forward was that the initial concession would provide leverage for further changes in later years. This is only the second social security Bill since the main 1966 Act. If we continue at the present rate without a precise commitment to make a change of this kind next year—and, if there is such a commitment, why not make it now?—many of the people who are the object of the amendment will no longer be with us. Therefore, the argument that a certain leverage is provided is unsatisfactory when we are dealing with those in greatest need who have not many years of life left.
The third argument concerns the issue of priorities. The Under-Secretary of State said in Committee that the cost of accepting an amendment similar to this would be about £10 million. For those with the degree of need about which I have been speaking, £10 million is a small sum. In case the hon. Gentleman seeks refuge behind that figure, I should like to spell out the priorities that the Government have adopted in other respects.
On the disaggregation of children's investment income—and it is only the children of the very rich who have investment income—the Government have made a concession costing £12 million a year. Giving the option of separate


taxation for women, which is not of value to a married couple whose joint income is less than £5,600 a year, the Government's concession costs £15 million a year. The Government have removed at a cost of £38 million a year the ceiling on earned income relief which goes exclusively to those with incomes of over £9,945 a year. They have removed the notional capital gains tax on disposals at death at a cost of £15 million. They have raised the limits at which estate duty is paid at a cost of £20 million.
In the current year the Government propose to give £300 million each year in reduced tax on unearned income, more than a third of which will go exclusively to those with incomes of over £5,000. The Government are giving £15 million to the building societies to reduce the increase in mortgage rates, the benefit of much of which will go to those on a reasonably high level of income and certainly will go to those with vastly higher levels of income than the people who are the object of this amendment. Therefore, I submit that this is a very reasonable amendment. We are concerned with some of the poorest and most helpless people in our society. All that we seek is the ending of a patent anomaly, which I am sure all hon. Members will agree exists. If we merely remove the offset for heating and not for diet, laundry, and other expenses, it will cost only £10 million.
I hope very much that the Under-Secretary will look favourably at this proposal.

Mr. Joseph Harper: If the Minister has not already done so, I urge him to read page 12 of this morning's Guardian. There, he will see an article headed "Poor Law", and there is a very apt photograph accompanying it.
For the information of hon. Members who are too young to remember, the Poor Law was the forerunner of supplementary benefit. We moved from the Poor Law to local assistance on the rates, to national assistance, and now to supplementary benefit.
Anyone wanting to understand the distress caused to a person on the Poor Law, who is among the poorest in the community, could not do much better than to look at the new television series

entitled "Sam". This week's programme was dedicated to the Poor Law as it affected people in the North West, the Midlands, and Yorkshire.
We have travelled a long way since the days when, if anyone wanted to apply for Poor Law and went along to the local office where it was paid out, he rapidly discovered that the faster people went in, the faster they were thrown out. For 90 per cent. of those who went in there was no Poor Law.
To a great many people it was known not as "the Poor Law" but by the name of the Gentleman doling out the pittance. I could give the name of the person who operated in my own area, where the Poor Law is still known by that name——

Mr. J. D. Concannon: Scrooge.

Mr. Harper: No. His name was not Scrooge, although he epitomised Scrooge in all that he did. I do not intend to embarrass his family by naming him, but he is remembered well in my part of the world.
Perhaps quite unintentionally, this part of the Bill overrides the recent High Court decision which has been referred to by my hon. Friend the Member for Oldham, West (Mr. Meacher). What happened was that a young single mother in charge of two children and therefore not required to register for work drew an exceptional circumstances addition allowance. Her entitlement was 35p a week, or seven shillings in old currency. When she had been in these distressed circumstances for two years she became entitled to the long-term addition of 50p a week, which has now risen to 60p. However, immediately her 35p was taken away, leaving her with an additional 15p. She was not over-enamoured with this arrangement, so she appealed and eventually her case went before the High Court.
I have always thought, rightly or wrongly, that whenever the High Court gives a decision everyone has to obey it. Apparently, that does not apply to this Government, or to the Supplementary Benefits Commission. The High Court decision said that the commission should not apply the rule of thumb that where a person was given one amount and then


got a larger amount, one should be subtracted from the other. In the face of that decision, apparently what the Supplementary Benefits Commission did was to circulate all its local offices telling them that they must not follow the High Court decision too closely and that apart from what the High Court specifically laid down—for children and help with heating——

Mr. Dean: The hon. Gentleman is being very unfair to the Suplementary Benefits Commission. I shall explain the point when I reply to the debate but let me say straight away that the Supplementary Benefits Commission will observe the law of the land like anyone else. It is doing just that. I shall explain the significance of the Bill in a moment. But it is quite unfair to say that the commission is not observing the law of the land.

Mr. Harper: In that event The Guardian should be submitting an apology, although The Guardian is a reputable newspaper which does not lightly print incorrect information.

Mr. O'Malley: It is the considered opinion of some people who are legally qualified that the Government and the Supplementary Benefits Commission are manifestly not obeying the law of the land and are completely ignoring the Simper decision in current instructions to officers of the commission to offset heating allowances against 50p of the long-term addition until October of this year.

Mr. Harper: I quite agree with my hon. Friend. The High Court made a clear decision. Immediately the Supplementary Benefits Commission found a way round it and decided not to abide by the spirit of that decision.
I have the feeling that this will not be the last decision of this kind. As soon as the Child Poverty Action Group finds a suitably aggrieved person there will be another High Court case, and it may be that this decision will be the better for it.
My hon. Friend the Member for Oldham, West quoted the case of a housebound widow of 77 who was in receipt of a heating allowance. I do not want to go into the details. My hon. Friend has explained the position fully. But there

are countless other cases, and to support what I say I draw attention again to today's article in The Guardian:
Hundreds of thousands of other claimants will find themselves in the same position as the Bradshaws, Mr. Bradshaw, who is 78, suffers from a prolonged intervertical disc and is registered disabled.
It is easier to find out what is right with him than what is wrong.
He has to wear a corset and is also recovering from pleurisy for which he receives an ECA for diet of 40p a week. His wife, who is 60, is suffering from terminal cancer.
The article goes on to list her other ailments. It is cases like that where people need all the help that we can give them. They are not receiving that help.
We seek to get the Minister to act in the spirit of what The Guardian describes as the "Poor Law" and what today is known as supplementary benefit to help unfortunate people who fall within this category. They should be helped with laundry, diet and heating costs. If it had not been for the recent High Court case, we should still have been in the same position. How many more High Court cases will there have to be before something is done for people in this category?

1.0 p.m.

Mr. Dean: In this debate we are dealing with people who have special needs and who require special help to meet them.
The Bill improves the arrangements in a number of respects which I shall describe. Understandably, the Opposition say that it does not improve them enough and that we ought to go still further. But there is no doubt that the arrangements are being improved in this Bill, as they have been on earlier occasions.
One of the earlier improvements which helped substantially in this area was the introduction of an annual review of both national insurance benefits and supplementary benefits. As a result, we got rid of the ups and down which used to occur in years when benefits were improved. It was quite impossible to explain to anyone on supplementary benefit how it was right that when his national insurance pension was increased his supplementary benefit was reduced. This change, introduced a year or two ago, has been a substantial improvement


for a number of people, including those about whom we are now talking.
The Bill also includes provision for the higher increase for those on long-term benefits—pensioners and others who have been on supplementary benefit for two years or more. The increases of £1 for a single person and £1·60 for a married couple bring the rates respectively to £7·75 and £12·50. When I quoted the rates earlier I underestimated. In fact, I quoted the lower rate of increase for the short-term beneficiaries, whereas I should have quoted the figures that I have just given of £7·75 and £.12·50. Those are the improvements which are made earlier on in the Bill.
I turn to the more detailed provisions. The first concerns paragraph 4(2) of the Schedule. This reflects the decision to incorporate the long-term addition into the new higher scale rates being introduced for long-term beneficiaries. This change enables the differential increases in long-term cases to be reflected fully and effectively in the supplementary benefit scheme. It is intended to remove the confusion and misunderstanding to which the long-term addition, as a separate element, has given rise and of which hon. Members are aware. In other words, what was thought to be an improvement in the arrangements in 1966 has in practice turned out to be a source of confusion, difficulty and misunderstanding. As a result, we are merging the long-term addition into the long-term scale rates and improving the 1966 arrangements.
The first result of the amendment would be to put us back to the disadvantages of the system that the 1966 arrangement was thought to be removing. It would result in a proliferation of small discretionary additions to benefit of the kind that existed before 1966 with all the detailed examination of individual circumstances which that would entail. The intention in 1966 was to get away from that, and the intention in the new arrangements is to keep away from that, but with the improvements that I have outlined.
The main change concerns heating. First, I should like to deal with the legal position. I repeat what I said to the hon. Member for Pontefract (Mr. Harper). It is most unfair to suggest

that the Supplementary Benefits Commission has not been observing the law or has been trying to get round High Court judgments. That is not so. The position is that until October—that is the date when the Bill comes into operation if it receives the approval of Parliament—heating additions will be offset. The Supplementary Benefits Commission has decided to do this as a matter of discretion following the Simper case in which it was decided that the commission should exercise its discretion. If a tribunal has decided that there should be no offsetting, the commission will implement the decision of that tribunal as required by law. From October there will be no offsetting. In other words, the present uncertainty will be clarified.

Mr. O'Malley: It is true that in the Simper case Mr. Justice Cusack decided that discretion was to be exercised. He said:
My interpretation of these regulations is that Paragraph 4(2)(a) means that a discretion is to be exercised
—and he went on to define the discretion—
that is to say, it is intended that the person making a determination of the sum of money due should exercise a broad judgment to ensure that in fact there is no overlapping, but that he ought not to proceed simply on a rule of thumb that exact deductions should be made.
The commission, presumably at the wish of the Government, is to exercise not an individual discretion on the lines of Mr. Justice Cusack's decision but a blanket discretion or decision that it will continue with the old method of offsetting where the whole of the first 50p of any heating allowance is set against the long term addition.

Mr. Dean: The commission, following this judgment, is to exercise its discretion. That is the position which now obtains and will continue to do so until October when the Bill clarifies the position in law. 'The quotation made by the hon. Gentleman supports that position. It is said that the commission must exercise its discretion. It is true that in the exercise of its discretion the commission lays down broad guidelines for its officers to follow, and so on. Surely this is in the interests of claimants, because they have an indication of the way that the commission will exercise its discretion in certain cases.


Were this not so, not only would it be intensely difficult for the scheme to be administered by local offices, but people would have no indication before they went to the commission about the type of help available and the circumstances in which they would get it.

Mr. O'Malley: The Minister has not answered my point at all. It is our view that the Supplementary Benefits Commission's current instructions to its local officers does not meet the requirements of the law as a result of the Simper case. May we get away from legal niceties? If it is morally right not to offset heating allowances against the long-term addition in October this year, and since it is possible for the Government and the commission to give instructions at the moment that the discretion is to be used and the result is that there is to be a complete offsetting, why are the Government and the commission persisting in maintaining their old attitudes, which have been knocked down by the decision of the court, when it is felt necessary to change the law in October? Why are they not meeting the just case of this poor group of people receiving these benefits before October? They have the power to do it. Why are they not doing it?

Mr. Dean: I shall be coming to the improvements in the heating arrangements provided in the Bill. Perhaps I may deal with the legal niceties. I am not a lawyer, but I am advised—I accept the advice—that the commission is acting within the law. It is acting entirely appropriately. Furthermore, where decisions have been made by tribunals that there should be no offsetting, the commission will abide by such decisions and carry them out until such time as the law is clarified in the way set out in the Bill.

Mr. Skinner: I should not like to accuse the Government of double standards—anyway, not on a Friday. Has the Minister considered that recently a matter which will be debated on Tuesday next—the question of illegal immigrants—has been brought before the courts and that the net result of that legal tangle is that the law will be used retrospectively? All that my hon. Friend the Member for Rotherham (Mr. O'Malley) is saying is that, as this decision has been made, and taking into account that the Bill becomes

law in October, if the Government find it necessary to use the law retrospectively against these so-called illegal immigrants, why can they not use it retrospectively for old-age pensioners?

Mr. Dean: I had better not get involved with debates which may take place next week. It is sufficient to concentrate on the present debate.
I come to the improvements which the Bill will bring about in the heating arrangements. The new arrangements will mean that from October additions for the exceptional heating expenses of long-term beneficiaries will always be met without regard to the special expenses margin in the long-term rate. We expect that over 400,000 people will receive some increase in benefit on this account alone. It is because of the concern expressed on both sides of the House and by people outside who are concerned about the welfare of the elderly and chronic sick that the Government have decided that this special measure should be taken so as to improve speedily the provision for heating expenses made in the supplementary benefits scheme.
When the Government are introducing an advance of this kind about which concern has been expressed on all sides I should have thought that there might have been just a little word of praise for them. For the hon. Member for Oldham, West (Mr. Meacher) to suggest that the Government have been shoved into this by legal action is totally untrue. It is typical of the hon. Gentleman never to give credit where it is due.
In Committee the hon. Member for Rotherham (Mr. O'Malley) accepted that there must be priorities. He said that his order of priorities would be heating, diet, laundry. I accept that he went on to say that the Government ought to do more than they are doing but we are all agreed that there have to be priorities. If we were to go beyond the £6 million or so which the improved heating arrangements involve and on to what is proposed by the Opposition we would need about £12 million. This has to be considered in the light of priorities.

Mr. O'Malley: I know that the hon. Gentleman would not wish to misquote me. When I laid down an order of


priorities I did not say that the first should be heating, the second special diet and the third laundry. I said that these three types of expenses were part of an integrated problem and should be considered together.

Mr. Dean: I am in no sense seeking to misrepresent the hon. Gentleman but he must face the issue. He knows as well as anyone that there is a tremendous demand upon resources in the social services. A good case can be made out for improving any of them and therefore priorities have to be allocated. I accept that it is right to put the improvement of heating arrangements at the top of the list. It is what the Government have done.
Coming to the point about diet I would point out that any special need costing over 50p is usually met up to a standard amount. The Supplementary Benefits Commission has a discretionary power which is used to pay more where necessary. When an expensive diet must be followed because of kidney failure, for example, the commission will, on medical advice, pay the full cost however high. It is important to stress how wide the powers of the commission are and the way in which it exercises them over and above the normal amounts laid down.
1.15 p.m.
We accept that there are people with multiple needs. They will benefit from the improvement in the rates of benefit. The hon. Member for Oldham, West is wrong to say that they will not. They will get the benefit of the improvements in the basic rates. If their special needs are more than 50p they will get the benefit of anything over and above that and there is the discretionary power of the commission where additional help is required. I am sure that these improvements will be welcomed by the House. The Government and the commission will watch the way in which they work out with care. I hope the House will feel that we have made an advance in this matter.

Mr. Alec Jones: Those of us who have served in Committee with the Under-Secretary know that he is always using his weakest argument when he turns to personal attack. When he attacks my hon. Friend the Member for Oldham, West (Mr. Meacher) I suspect that his

argument is very weak. He told us that the Bill dealt with the special needs of people and the special help given to them. This is not how I see it. As I see it the Government are proposing to use the long-term addition, specially designed to meet the needs associated with a long period of supplementary benefit, for special needs such as diet and laundry.
When the Minister talked about the need to lay down broad general guidelines he was not answering the point that in practice the Supplementary Benefits Commission is continuing to offset the heating allowance against the long-term addition. We can find no justification for continuing with this after the High Court decision. The commission and the Government should be more concerned with the principle of social justice and fair play for these people rather than sticking to the strict letter of the law.
The hon. Gentleman talked of the benefits that would be going to these people. He mentioned the annual up-rating. Such items as long-term additions, disregards and aggregations are seldom included in the annual uprating. The Minister said that 400,000 people would benefit as from October from the new arrangements for the heating allowance. Of course we are all pleased at this, but it is stretching imagination too far to suggest that this improvement was brought about solely by the Government's kindness and had nothing to do with the High Court judgment and the activities of the Child Poverty Action Group.
The Minister did not deal fairly with the question of priority or answer the forceful point about those with a combination of need, for special diet and special laundry facilities as well as for heating. Payment for laundry or diet may be more important to some than a heating allowance. Each case should be judged on its merits. If we suggest that the next priority is diet, we are forgetting those with different needs or combinations of need.
We have ignored the strong feeling among the experts who deal with these cases all the time. Hon. Members on this side have had considerable correspondence from the CPAG, giving details of many cases which will not be materially affected by the Bill. The Minister said that there will be an improvement in


cases of multiple need. Of course there will, if that need includes heating, but if the multiple need is laundry and diet, there will be no improvement. Anyway, the improvement will be marginal and is not worth much praise to any Government.
The British Association of Social Workers has written to Members:
…the time to legislate is now in order to bring a little immediate relief to some of the poorest and most handicapped in the country.
Task Force has written:
It is unfair and illogical to ignore exceptional circumstances additions for heating when assessing a claimant's benefit and not to ignore them for special diets, laundry and most other exceptional costs. The vast majority of the 16,000 pensioners in regular contact with Task Force volunteers have interlockng needs of which heating is one.
I have also had a letter from the Social Services Department of the East Sussex County Council, in which the Director of Social Services says:
Great anxiety has been expressed about the hardship that this
—the provisions of the Bill and the failure to improve the situation—
will cause to our clients, especially those with exceptional needs regarding diet and laundry.
So far as the Bill deals specifically with exceptional needs, we have missed the boat and failed to satisfy the needs of the most deserving and poorest sections of the community.
The Minister's reply was disappointing to us; it will disappoint the social workers and distress those whom we are trying to help. The Under-Secretary is usually far more generous than his words today suggested. I should like to think that his words came not from his own heart but from the restrictions imposed by the Treasury. I hope that he and the Secretary of State will stand up for these needy people.
We accept that there must be priorities in every service, but there are priorities among all aspects of Government policy and we want to be sure that the Government get their priorities right. How can we say that this is a reasonable order of priorities when we know the vast sums of money that have been handed over to surtax payers and the building societies? This debate has shown that we need a complete redefinition of the exceptional needs and the

Long-term additions. Our next debate will show that we need a similar review of disregards for supplementary benefits.

Amendment negatived.

Mr. O'Malley: I beg to move Amendment No. 3, in page 17, line 43, at end insert:
`8. In paragraphs 24 and 25 of the Schedule there shall be substituted—

(a) for each reference to £1·00, a reference to £1·75.
(b) for each reference to £2·00, a reference to £3·50.'


I understand that it will be convenient also to discuss at the same time the following amendments: No. 4, in page 17, line 43, at end insert:
'8. In paragraph 25(i) of the Schedule there shall be added:
(g) any retirement benefit arising from the payment of graduated contributions under the National Insurance Acts".'.
Amendment No. 5, in page 17, line 43, at end insert:
'8. In paragraph 24 of the Schedule:
(a) in sub-paragraph (1) (f), for"£0·38"there shall be substituted £1·50;
 (b) in sub-paragraph (1) (g), for"£0.28"there shall be substituted £1·50;
(c)in sub—paragraph (2) (a), for the words "widow's allowance or widowed mother's allowance" there shall be substituted the words "benefit at the weekly rate of £3·80 or £2·90"; and
(d)in sub-paragraph (3)(a), for the words "Widow's allowance, widowed mother's allowance or child's special allowance" there shall be substituted the word "benefit at the weekly rate of £2·80".'.
The simple purpose of these amendments is to raise the level of special disregards for a wide range of categories of income received by recipients of supplementary benefit. One amendment seeks to include benefits from graduated contributions for disregard purposes.
A good example to illustrate this point is the position of retired miners and their widows as a result of the increased pensions that have been negotiated by the National Union of Mineworkers from the NCB. There is deep anger and resentment in the coalfields at the way in which retired miners and miners' widows are being treated by this Government.
Earlier this year, with the Government's consent, the NUM and the NCB negotiated an improved miner's pension,


increasing it from £1·50 to £3 for retired miners and from 75p to £1·50 for widows. Immediately, many of these people lost all, and all of them lost most, of their increase if they were dependent on supplementary benefit. The amount of benefit was knocked down in the very week that they received their increased pension.
So the NUM negotiated an increase of 75p for the widows of men who had worked down the mines, not the most pleasant job in Britain, all their lives, and the maximum that such a widow can receive of that increase is 25p because the present disregard for supplementary benefit is £1. Many of the men whose pension was raised from £1·50 to £3 got nothing at all.
What is so sad about the situation, apart from the change in the value of money, is that, both in Committee and at Question Time, when the Minister answered a pointed question from my hon. Friend the Member for Pontefract (Mr. Harper), he showed that he did not even understand the position or know what is happening in the coalfields.
I come from a mining village and my hon. Friends are from such areas, too. We can tell the hon. Gentleman what is happening because every week we have cases by the dozen concerning old ladies and elderly retired miners who simply do not understand what is going on and who lose virtually all their benefit. They resent it bitterly.

Mr. Harper: Does my hon. Friend realise that the Under-Secretary of State contested the by-election at Pontefract in 1962, when we tried hard to educate him in such matters?

1.30 p.m.

Mr. O'Malley: All I can say is that places like Pontefract understand the hon. Gentleman. That is why they never sent him here.

Mr. Dean: I remember the incident to which the hon. Member for Pontefract (Mr. Harper) refers, but it is particularly unfair to claim for the Opposition a monopoly of understanding of these matters. I happen to have coal miners in my constituency, and so do many of my hon. Friends.

Mr. O'Malley: The hon. Gentleman may have coal miners in his constituency

but I am sure that none of them votes for him. I never assume that the Opposition has a monopoly of wisdom or virtue, although there is precious little sign of wisdom, virtue, humility or any other better qualities in the conduct of the present administration. If it were not for what the hon. Gentleman has on the record I would not have made a claim like that. But in Committee the Under-Secretary said:
Many of the retired miners concerned will, in fact, be better off financially in the future, unless their rent is high, by forgoing supplementary benefit and claiming a rent rebate or allowance instead.
That is not true, and I will tell the hon. Gentleman why. First, the assumption he makes is that unless the rent is high there will be circumstances in which the Supplementary Benefits Commission can refuse to pay the full rent because it only expected to pay a reasonable rent. But it is in only 1 per cent of cases throughout the country that the commission exercises its powers, and that 1 per cent is largely centred in London, particularly central London. But we are not talking about S.W.1 when we get to Pontefract, Rotherham, and Mansfield, and the towns and valleys of South Wales.
The hon. Gentleman also said, in Committee:
This is because recent increases in the needs allowances in the rent rebate allowance scheme have altered the relationship with the comparative supplementary benefit scale rates so that people with small amounts of occupational pension are better off financially after paying rebate and housing costs than they would be on supplementary benefit.
That is not true either in cases where rents are low, or comparatively low. The situation is the opposite of what the hon. Gentleman said. In the mining areas many retired miners and their wives and miners' widows are living in low-rent houses, because in such areas rents are traditionally nothing like they are in the south of England. They are also often in older-type properties—smaller, cottage-type properties, as they were called by 19th century rate officers. They do not stand to benefit by asking for supplementary benefit in addition to rent rebate. Large numbers of retired miners and widows, taking into account any rent rebate arrangements that may exist, will, if they have a pension increase of £1·50, lose the lot. Others will not lose the


lot, as there will be some kind of benefit accruing from rent rebates.
But when the Government introduced the Housing Finance Act they never said that they were introducing rent rebates because they would have to do something about disregards. That is a post facto argument. The hon. Gentleman has already given the game away in Committee. I cannot quote him because the proceedings are not available, but he said that he accepted the case for improvement of the disregards.
Let us be clear that the only valid argument from the Government's point of view, although I do not accept it, is the cost. It is against the background outlined by my hon. Friend the Member for Oldham, West (Mr. Meacher) that our belief in this amendment follows the money being doled out by the barrel load to the wealthier sections of the community while the mining areas get nothing in terms of disregard changes.
Yet the Government's attitude towards disregards and their refusal to raise them are in clear opposition to their stated pension policy. What is the point of unions and employers discussing occupational pensions—particularly when they are very small—if the only result is that the men and women receiving such small pensions are no better off? That is the difference between half pay on retirement, for example, for executives and the very tiny occupational pensions, even at the level of £3.
The case of the miners illustrates the general argument for increasing the disregards. They have not been put up since 1966. The disregard was set at £2 a week for supplementary benefit purposes—for example, for the disablement pension, for compensation under any enactment relating to workmen's compensation, and for disablement benefit under the National Insurance (Industrial Injuries) Act 1965.
We are talking largely about a group of people which includes pneumoconiosis victims. They are not all recognised as such, but when they are it is this type of category that we are dealing with when we consider the increase. The £1 disregard is for other categories of income. The £2 disregard, set in 1966, in today's terms is worth about £1·20. The £1 dis-

regard in 1966 has fallen in value to about 60p. The value has fallen steadily over the years, dramatically so as a result of the inflation produced by the policies of the Government. I examined the movement since 1966 in basic scale rates, including the present up-ratings of 76·5 per cent. for the single person and 75·2 per cent. for married persons and concluded that it was reasonable therefore to increase disregards by 75 per cent. Therefore, our first amendment would increase the disregard of £1 to £1·75 and the £2 disregard to £3·50. This movement would bring some benefit to the mineworking community, which many Opposition Members represent.
I wish to refer to the case which my hon. Friend the Member for Oldham, West brought to the Under-Secretary's attention in Committee. My hon. Friend the Member for Glasgow, Springburn (Mr. Buchanan) told me in a letter that the National Union of Railwaymen had negotiated ex-gratia payments for a number of elderly railwaymen who were too old to enter the pension scheme. In the case quoted to me by my hon. Friend the Member for Springburn no disregard was being given.
I am grateful for the information the Under-Secretary gave me in a letter that I received this week. Will he confirm that the general situation is that, when applications for supplementary benefit are made to local officers, if there are such ex-gratia payments the applicants are entitled under the general rules of the scheme to the disregard in just the same way as any other income.
In Amendment No. 4, my hon. Friends and I raise the question of the treatment of
retirement benefit arising from the payment of graduated contributions under the National Insurance Acts.
At present, any income accruing from graduated contributions is not disregarded for supplementary benefit purposes. The reason the Government, despite representations made to them, have refused to amend this situation is that they say that graduated benefits are an integrated part of the national insurance system.
There is one group of recipients of graduated pensions who must be given special consideration. For workers whose firms decide not to opt out of graduated contributions between £9 and £18 there


is no alternative open to people paying contributions within that earnings band but to be in the graduated system. At present, those who are contracted out pay only 0·5 per cent. contributions between £9 and £18, whereas those who are not contracted out pay 4·75 per cent.
The graduated pension for that group of people is as much an occupational pension, albeit a State occupational pension, as that of their workmates down the road who are in a private occupational scheme. There could be two brothers, one working at one factory, the other at another factory down the road, on identical incomes, but with one brother paying his contribution, between £9 and £18 and 4·75 per cent., into the State scheme. When he retires he cannot get any of that disregarded for supplementary benefit purposes. The other man is with an employer who says "We will provide an occupational pension in that range of £9 to £15. We will stop the same percentage—4·75 per cent.—from the employee." The difference is that when he gets the pension that income can be disregarded. The man in the State scheme is not in the same position.
Unless the Government are prepared to do something about this, it is another clear indication that they always put the interests of the private occupational schemes first. It is another piece in the saga we saw enacted when the Secretary of State survived by only four votes after saying, "We will give tax relief if you are a member of an occupational pension scheme, but a member of the State reserve scheme cannot have such treatment."
1.45 p.m.
I recognise that the amendment as it stands is probably defective, but the Under-Secretary must recognise the justice of the claims of this section of non-contracted out workers within the Boyd-Carpenter scheme. There is no reason why the Government, if they were prepared to do so, should not introduce an amendment in another place to meet the point.
As for the third amendment, it will be seen that disregards in respect of widows are being increased substantially up to the level of £1·50. The present disregards of 38p and 28p per child for widows goes back to 1964 when the pre-

ferential national insurance rate for widows' children which had been 10s. above the normal children's rates was increased by another 7s. 6d. each for the first two children and 5s. 6d. each for the third and subsequent children. This increase was disregarded for national insurance purposes and the same disregards were carried over in the Ministry of Social Security Act 1966.
However, since 1966 there have been further increases in the gap between allowances for widows and for children. In 1971 the preferential rates were extended to retirement and invalidity pensioners. Since 1968 the gap has been the same for the third and subsequent children as for the first two. The gap, which was 17s. 6d. in 1968 and 18s. in 1969, went up to £1·10 in 1971 and £1·50 in 1973. The effect of our amendment would be to disregard the whole of that £1·50, not only for widows, but also for retirement and invalidity pensioners.
It is inconceivable, when the Government have been able to give the massive financial hand-out that they have been doing to wealthy sections of the community, that they should not be able to afford to bring up to date levels of disregards which were set almost in another world nearly eight years ago in 1966.
I therefore hope that the Under-Secretary will have the example of retired mineworkers in the forefront of his mind and will realise the general implications throughout the country for many poor people. They would have to be poor to fall within the range of supplementary benefit. It would be intolerably unjust in a time of unprecedented inflation such as this not to increase these disregards as we suggest. Our suggestions are modest. They would bring the disregards only up to what they were in 1966. I hope that the Under-Secretary will be able to accept them.

Mr. Concannon: On Amendment No. 3, I thank my hon. Friend the Member for Rotherham (Mr. O'Malley) for putting the case so well on behalf of the miners whom he represents to a great extent around the Rotherham area in the South Yorkshire coalfields.
When the National Union of Mineworkers was negotiating early this year


for a wage increase, it was tied to the norm of £1 plus 4 per cent. To a great extent the union and those working in the industry were bought off by the addition of certain fringe benefits, one of which was the offer to increase pensions by 100 per cent. from £1·50 to £3 a week.
It has always been very difficult to discuss pensions in the mining industry, and there is a reason for this. When one enters the mining industry, usually not through choice but because of economic necessity, there is little point in talking about pensions because many miners never expect to live long enough to draw one. I am thankful for the fact that the National Union of Mineworkers and the National Coal Board decided to sort me out at an early age. That fact, which is to their great credit, will put another 10 or 15 years on my life. I imagine that my hon. Friend the Member for Pontefract (Mr. Harper) is now approaching the age when he is living on borrowed time.
In such debates it is as well to reflect on one's own family. My father never made it; he died at the age of 57. My father-in-law packed up work at 60 and died when he was 65 years. For his last five years he could hardly walk, let alone work. I now have two miners' widows in the family. So we know the problems involved, and if the subject of pensions is ever raised in the mining industry one is always up against the problems of which I have spoken.
That is why pensions in the mining industry are disgraceful. They are still disgraceful, even though the weekly pension is now £3. To compare it with the old age pension of 30s. is really shameful. At the time of the l00 per cent. pension increase offer, some of us stood our corner and said that we should accept the increase. We had to argue against people who said that if it were increased in the same way as it was increased the last time, many of our members would lose on it, and the only thing we would be doing would be to subsidise the Government. That is the kind of attitude that some of us had to talk down.
At the end of the day, after the miners discussed whether to take strike action or

accept the offer, it was felt that to a great extent many retired mineworkers and their widows would be helped if the offer were accepted. Now they are bitterly resentful at what has happened. Morally we have got to increase the pension, but I expected, and I still expect, the Government to look at these disregards so that some benefit can be obtained.
I am more fortunate than my hon. Friends the Members for Pontefract, for Bolsover (Mr. Skinner) and for Rhondda, West (Mr. Alec Jones). The Nottinghamshire coalfield is the only one in which an extra pension is paid. A Nottinghamshire miner of any standing gets two pensions. I do not know about the mail bags of my hon. Friends, but I am inundated with letters. The percentage of people in my area who are caught in this trap must be only a half or a quarter of those caught in other coalfields.
I received a letter this morning, not from an ordinary mineworker but from one of the top mining engineers in my area. He was talking about his widowed mother. This is the kind of thing that is happening in the coalfields at the moment:
To hear the Tory Government speakers these days, shouting about how much they have given to pensioners, you would think that they have given them the whole world. It may be that they have lifted the basic pension, but it appears that when some organisation such as the N.U.M. lift their pension to help the elderly, then the Tory Government, far from being so benevolent, as they seem to wish their image to be, promptly grab anything which is given to help".
He adds a postscript, as follows:
Since I wrote the letter, a man from the Social Security office has been to see my mother to tell her that it is the Government's policy to reduce supplementary benefits, if any other income is increased.
The social security office in Mansfield is staffed to a great extent by people with whom I am proud to associate myself. They do a great deal of social work and they have a social conscience. The manager of the establishment is absolutely first class, and most of the people working under him are like that. They are bound to be, when they have to deal with injured mineworkers and such people. I only hope that my reference to this manager does not have any detrimental effect


on him. I should hate to see him hammered.
Let us take the case of this widowed mother. Her pension was increased by 75p a week. On the very day when the pension was increased, the National Coal Board increased the rent of her property. The two days are the same—2nd April 1973. She was receiving £8·60 per week from the Department of Health and Social Security. After the 75p. increase her pension was reduced to £8·10, so straight away she lost 50p of the 75p. She then lost 20p of her rent allowance supplement. So this widowed pensioner has 5p left from the 75p increase.
The man who wrote to me also wrote to the Department of Health and Social Security about this case stating that it is grossly unfair for widows to be treated in this fashion, in this day and age when we have the scandals of Lonrho, Ferranti, Slater-Walker and John Bloom. I completely agree. We do not want to go back to our people and be asked "What kind of society are we living in at the moment?" But while the Government are getting up to tricks like this it is very hard for us who represent these areas to talk rationally about these problems.
If the Minister wants to get these pension schemes going in certain industries, the very way to kill them is to continue with tricks like this. The people whom we hit the hardest are the people who can least afford to be hit hard. Those who are not well off by any standards, who are not drawing supplementary benefits and who are right on the breadline, expect some kind of increase, and then when they get the increase their order books are taken away, a mathematical shuffle goes on, and they get nothing. There is great bitterness and resentment, and I give full backing to my hon. Friend the Member for Rotherham (Mr. O'Malley) on his admendment.
Knowing where my hon. Friend comes from, I have every confidence that, had he been the Under-Secretary of State in a Labour Government, this improvement would have been made, though I can tell him—he will understand this—that we should not have let him out of Rotherham if nothing had been done. If nothing had happened we should probably have tied him on the end of the string with which we measured pit shafts. However,

as I say, I have all the confidence in the world that this matter would have been properly dealt with by a Labour Government, and I only hope that it is not too late to persuade a Tory Minister to sort something out so that the disregards are raised.

2.0. p.m.

Mr. Skinner: The argument has been well put, but a few points need embellishing so that the Minister may fully understand what is in issue and, in his wisdom, sympathy and compassion tell us that he will accede to our request for an increase in the disregards. I am sure that he will.
It is worth remembering that the loss of supplementary benefits, distasteful though these benefits are in themselves, may mean the loss of a passport to a good many other forms of social assistance. For example, if a miner has been retired disabled before the age of 65, with his miner's pension, previously £1·50 and now increased, the result of his increase in miner's pension whereby he loses £1·50 from supplementary benefit is that he loses free prescriptions as well. Also, it may affect him in a good many other services administered by the local authority.
I do not think that the Minister fully understood this the other day when my hon. Friend the Member for Pontefract (Mr. Harper) put it to him. It is not a matter of transferring £1·50 in the case of the retired miner, and 75p in the case of a miner's widow, from one pocket to the other. There is far more in it than that, though that is bad enough. We expected that anyway. I forecast it in the coal industry debate on 21st December last year, when the Minister for Industry, waving his arms about and acting as though he thought he was Santa Claus, told us that he would assist retired miners. We knew then what would happen, that there would be a transfer of money from one Department to another, but, as I say, the matter is worse than that.
The Minister and his right hon. and hon. Friends constantly talk about the underprivileged, the poor old ladies in the supermarket looking about for two slices of meat loaf. They may well be the widows of retired miners, and they know what happens. When the books are returned to the social security or


supplementary benefit offices, along comes an official—he has got his job to do—to examine what people have been getting. He finds that there has been £1·50 or 75p extra in the form of the miner's pension, and he may find other discrepanies. There may have been a rent rebate by the local authority. The sort of rebate I am thinking of would not happen where I live, because the Housing Finance Act has not yet been implemented; though that will, no doubt. be sorted out shortly in the courts.
Where this diligent official finds that 20p too much has been paid out by the local authority in rent rebate and 20p has been paid out by the Supplementary Benefits Commission, that sum is lost as well. The net result is that, not just on the basis of technicalities which come to light but as a result of the system itself, miners and the widows of retired miners end up worse off than they were before, and in some cases, as I say, they lose the passport to various other services which go with the payment of supplementary benefit. We are talking here of sums as large as £2 a week. That is the immensity of it. I do not say that that is so in every case, but that is the way things go.
In the coal industry debate in December last year, we forecast what would happen, and then, when it happened, we had the appalling experience of having the miners' wages negotiation mixed up with it.
It is no good the Minister saying that what the Government are doing now is like what the Labour Government did in 1969. It is not. In 1969, when pensions were increased, it was a joint exercise by the NUM and the NCB. This occasion is quite different. The Government in the form of the Department of Trade and Industry, transferred a certain sum of money—£25 million up to 1976, rising to £40 million by 1978—to the NUM and the NCM and said, "Here is something to provide a pension increase for all your retired miners and miners' widows". Therefore, this is not like the last exercise in 1969, although the Minister pretended that it was at Question Time on Tuesday. This is money from one Government Department taken back by another, the Department of Health and Social Security, through the supplementary benefit offices. That is the scan-

dal of the situation, and that is why I have a Question down to the master himself, the Prime Minister, for Tuesday next on the lack of co-ordination between these two Departments. Unfortunately, the Table Office has not been able to give me No. 1 on that occasion, so a Written Answer may have to suffice. However, as I say, the situation here is entirely different from that in 1969 when the Labour Government were in power.
By the way, where are the Liberals? This is an important issue affecting the whole question of pensions and supplementary benefits, not just the disregards, yet not a single Liberal Member has been here all day to represent his party. But I suppose that no Liberal could represent his party, because it has so many different policies. What is its policy on pensions? Not one Liberal Member has been here to tell us.
What about the Press, too? The Press often talks about the way Members attend for various debates. I remember the debate on pensions not long ago when the man from the Daily Mirror was running about up there taking a count every 20 minutes because, he said, there were not enough Members in the Chamber. Where is the Press today? There is not one. They have left it all to the Press Association fellow. He will have to write it for them all because there is not one representative of the Press or the Lobby——

Mr. Deputy Speaker (Mr. E. L. Mallalieu): Order. It is not in order to take note of persons in the Gallery.

Mr. Skinner: I am not supposed to notice a lot that takes place here, Mr. Deputy Speaker. I am not supposed to notice, but in fact I do, and what I am saying is of importance in relation to debates in the House. At some time, somebody ought to say it.

Mr. Deputy Speaker: Order. The hon. Gentleman cannot have understood what was said from the Chair. The Chair will have to take other measures in due course if he does not get back to his speech on the amendment.

Mr. Skinner: We fully expected that the Chair would have to take measures but it must be said nevertheless. Perhaps on some other occasion it will be gone into in much greater detail when perhaps it will be explained why the Leader of


the Liberal Party can introduce a Bill providing for an employees' charter on one day yet not be here to discuss the very important question of old-age pensions the next, and when others can talk about inquiries into the Poulson affair, putting down Questions for Written Answer day after day when they are not even in the place, and are not even prepared to express concern for the old-age pensioners who are reduced to shameful circumstances as a result of the Tory Government's actions.
Perhaps I should pass on to more important people. It is a shameful situation where the Prime Minister can have an increase in pension of £3,500 without paying a penny, a non-contributory increase which brings his pension up to £7,500, and yet thousands of miners and others, including, it seems, the railway-men, having been given a paltry pension increase in order to buy a few scraps at the supermarket, are now having it taken away from them by another Government Department. This is the scandal of the situation and that is why it is important for some of us to be here today to make the point—not that the Minister is here to listen to it anyway.
But the case is an important one. It is different from those we have had on previous occasions. It is not merely one is which a pension scheme has been devolved by the employer and the employee, and in which the supplementary benefits have been taken away. It is more than that. It means that on this occasion the Government have granted a sum of money to the Coal Board and the NUM to provide a pension increase, paltry though it is, and another Government Department has taken it away. That is why we feel that it is high time that the Minister should introduce very quickly, if he cannot accept the amendment, an increase in the present level of disregards of £1 and £2 in order that some or perhaps all of the benefits can be felt by the people who have suffered from them. I hope that the matter has been put into perspective and I hope that my hon. Friends will say a few more words on the matter.

Mr. Alec Jones: I rise to support the amendments, particularly Amendment No. 3. I suppose that after the speeches

by my hon. Friends the Members for Mansfield (Mr. Concannon) and Bolsover (Mr. Skinner), and now by myself representing Rhondda West—all mining areas —the debate might appear to be turning completely into a case of special pleading on behalf of the miners. If that were so it would be justified because, irrespective of the general problem contained in the Bill and the proposals in the amendments, the specific case of the mine-workers and the way in which their recent pension increase has been affected deserves special consideration by the Government.
We are here concerned with more than just a specific case, however. There is a general problem. I am sure that my hon. Friends have no greater difficulty than trying to explain to constituents who come to their surgeries what on earth the disregards are all about. I find it impossible to justify to people many of the problems they incur over the disregards. The pamphlet SBI issued by the Department explains their rights to supplementary benefit. It includes the calculation of resources and it explains how to treat different income in different ways dependent upon how it was earned. A sum of £2 is disregarded for part-time earnings; £2 of any earnings of the wife are not counted; however, if it is other income, such as the income of an ex-miner, only £1 is disregarded. People generally find it extremely difficult to understand the justification for the different treatment of the different incomes. If we are to have disregards we should disregard sums of money, not apply a different type of disregard to suit the way in which money was earned.
The other problem is that the disregard has lost its 1966 value. The Library of the House has given us valuable information showing how unemployment benefits, retirement pensions, and supplementary benefits have risen since 1948. The supplementary benefit, or national assistance as it was then, was £6·65 in 1966 for husband and wife. It is now £11·65, which is a substantial increase. Yet, the disregard, which was an integral part of the 1966 Social Security Act and which was put into it for a specific purpose to meet a specific need, has remained exactly where it was. The pound in 1966 is a pound in 1973. The £2 is still the same.
2.15 p.m.
I would have thought that the Government would have to consider seriously whether the disregard was necessary in 1973. If they conclude that it is, as I believe it to be, then it is vital that it should be uprated. To leave it at its present level is dishonest. It means not only that it has lost its value but that we are merely playing with the idea of disregarding. The purpose of the disregard was to provide that supplementary benefit claimants should derive some benefit from any small outside income. We are not here concerned with people in the middle or higher bracket. We are dealing with the poorer sections of the community, the people who by the very nature of things are forced on to supplementary benefit, and the present level of the disregard is certainly not sufficient to meet its original intention.
My hon. Friends are right to emphasise the effect which the disregard has at its present level on the mineworkers' pension. Certainly, the miners and many of their union officials cheered and applauded when the pension was announced to be increased from 30s. to £3. They expected to derive some benefit from it, but now find that they are denied any benefit because the pension increase has been deducted from the supplementary benefit payment. That is no way to treat a poor and deserving section of the community and it is no way to encourage good industrial relations in the mining industry.
If I were a miner and I were offered a similar deal by the Government on the next occasion I know exactly what I would tell them to do with it. To pretend that they are giving a pension increase of 30s. when all they are doing is giving it with the right hand and taking it with the left is the height of dishonesty. The least the Government should do today is to accept that the disregard is as necessary now as it was in 1966 and accept that it should be given equivalent value. I hope that the Minister will have the decency and commonsense to accept our amendment.

Mr. Harper: When the Minister sits on the Treasury Bench, looks over at this side of the House and sees a few miners he can no doubt guess that we are going to talk about the mining industry and the

people who work in it. As I have already explained, he contested Pontefract 11 years ago and no doubt he learned a lot from his three-week sojourn in that town.

Mr. Alec Jones: Is that the length of time he was there?

Mr. Harper: He was not there for much longer. I know that basically he is a compassionate man. In pressing these amendments, we are trying to say that the disregards should be increased. I shall not be able to contribute much more to what my hon. Friends the Members for Mansfield (Mr. Concannon) and Bolsover (Mr. Skinner) said. I disagree with one point made by my hon. Friend the Member for Mansfield. I always thought that he was a friend of mine. I object to his initial remarks, but on the rest I agreed with him 100 per cent. I do not feel as if I am creeping up to retirement age. No retirement age is laid down. We lay it down only for the heavy industries.
But we take my hon. Friend's point. Many people do not live to the retiring age of 65 and so do not receive any benefit. What is the use of the best benefits in the world if people do not live to enjoy them? I am reminded of a visit I paid to the Soviet Union in 1956. During our three weeks there we had the splendid benefits pointed out to us, but I asked the naive and simple question "Does anybody ever draw them?"
I should like to trump the ace that I am sure the Minister will play. He will say that when the miners' pension, which had been £1 a week for years, was raised to £1·50, the then Labour Government did not raise the disregards, although we asked them to, and the 50p was taken off. But times have changed since then. We were then passing through an economic crisis, and for the present the political scene seems calmer. We seem to be in the midst of a boom. Perhaps the slump is to come in a few years' time, though I sincerely hope that it never will.
The disregards affect people who have worked in the mining industry for 51 years, and in some cases 52. They used to leave school at 13 years. Then the school leaving age was raised to 14. I left at 14, and I believe that my hon. Friend the Member for Mansfield left at 15. Now the school leaving age is 16.


No doubt one day somebody will have the good idea of making it 18.
After 52 years' service, 51 years of them underground, the miners are subjected to the sort of treatment we are complaining about. Money is given with one hand and taken back with the other. My hon. Friend the Member for Rotherham (Mr. O'Malley) said that they were very angry about it. I believe that they are not only angry but bewildered. When they come to my surgery and my home I get out all the literature that the Department sends me, and I have the devil of a job trying to explain what it is all about.
My hon. Friend the Member for Rotherham said that the amendments, particularly Amendment No. 3, should be accepted for the simple reason that we are asking not for a rise but just for the reinstatement of the value of the pound as it was in 1966. Apparently, it needs to be raised to £1·75 to have the same value as it had in 1966. We on this side believe that in justice and fairness that should be done.
What is being done in the Bill, and has been done ever since the Tory Government came to office in June 1970, is to transfer the responsibility which has always been the State's to the local authority. My constituents write to me saying, "I have had a £1·50 increase in pension, and they take £1·50 back." Others have had £1 taken back. Some have lost the whole and some have lost part. I have to tell them that they must apply for rent and rate rebates. They do that, which is transferring the burden from the State to the local authority. For authorities such as mine, with many retired and redundant miners, those under the age of 65, even the increased help under the rate support grant does not cover the situation. That is unfair.
Another point concerns those miners under the age of 65 who have had an increase in what is known as the incapacitated pension. In future they will have to pay for prescriptions, and that should not happen.
The Minister will reply that all these benefits cost money—I know that that is so—and that it is easy to say in opposition what we cannot say in government. Having been a member of the previous Government, I understand that. But the

present Government have given tax reliefs to the tune of hundreds of millions of pounds. Members of Parliament have benefited a little from that as well, but we could do without it. The money should go where it really belongs, to the people in need.
I ask the Minister once again to give serious consideration to the raising of the disregards, to give them the value that they had in 1966. We are not asking for an increase.

Mr. Dean: I have listened with understanding to what has been said in the debate. Much of it I would not wish to contest, particularly when one considers it as a case in isolation. The hon. Member for Rotherham (Mr. O'Malley) well knows, because he has been through it himself, that in the now annual up-ratings every Government must make the difficult and often agonising choice of what should be in and what should be left out.
Under the Bill and associated measures we have increases in benefits amounting in a full year to £570 million. There is for pensioners, both those on national insurance pensions and those on supplementary pensions, the biggest increase in pension in any 12 months period. The disregards, as the hon. Member for Pontefract (Mr. Harper) has just recognised, are a call on resources. The hon. Gentleman has also recognised, from his own experience in government, that this factor has to be taken into account. The Opposition's proposal in the amendments would involve an additional cost of about £16 million a year. That is the extent of the additional call on resources over and above what is provided in the Bill.
An improvement in the disregards helps only those who have additional resources to be disregarded, whereas an increase in the basic rate helps everyone. A general increase in the benefit levels, such as we are making this year, helps all beneficiaries, whether or not they have disregarded resources. This is one of the factors which Governments have to bear in mind when deciding whether all the resources, as in this year's Bill, should go to all beneficiaries who can benefit through an improvement in the basic rates, or whether some


should go to those people who have additional resources and therefore in respect of whom the disregard operates. That is one side of the equation which has to be considered.
On the other hand the Government fully accept that there is a case for improving the disregards. The Government have frequently said this. The case gets stronger each year, because the disregards have not been improved since 1966.
We are anxious to encourage savings and to see that those people who have put something aside for a rainy day are not penalised for doing so. We recognise what the hon. Member for Mansfield (Mr. Concannon) put so forcefully, that it would be exceedingly difficult to persuade people to join occupational schemes, and to persuade those who run the schemes to improve the level of the pensions, if the effect will be that there will be no additional improvement for the people concerned. I recognise the strength of that argument and therefore that there is a case for an improvement in the disregards and that the time will come when rightly it appears at the top of the list.
2.30 p.m.
I turn to the argument about the mineworkers' pension which was put so strongly and understandably by the hon. Members for Rotherham, Mansfield, Bolsover (Mr. Skinner), Rhondda, West (Mr. Alec Jones) and Pontefract. Miners who are not on supplementary benefit will gain the full increase. We are talking only about some people who are on supplementary benefit. This applies not only to miners but to any occupational pensioner who receives an increase.
But—and this is particularly relevant to the point mentioned by the hon. Member for Mansfield—I hope that hon. Gentlemen, in understandably advancing a powerful case, will recognise that this is not a new problem which has suddenly arisen. The same situation arose when the Labour Government were in office. When the mineworkers' pension was increased from £1 to £1·50 in 1969 there were no offsetting factors, such as the rent rebate arrangements. As now £1 was the limit of the disregard which was allowed for the occupational pension.

Therefore, on that occasion the increase of 50p was of no benefit to the miners who were on full supplementary benefit.

Mr. O'Malley: In addition to the differences mentioned by my hon. Friend the Member for Bolsover (Mr. Skinner), it was accepted, and I think that it remains accepted, by both sides of the House that the disregards would not be improved every time that the scale rates were improved. In 1969 the disregards of £1 and £2 were far higher in real terms than they are now. We are four years of rapid inflation on, and, to that extent, the argument is stronger, as the Minister will recognise.

Mr. Dean: I am not arguing that. I am reminding the House, I hope fairly, that this is not a new situation but one which arose under the Labour Government in 1969, when the mineworkers' pension was last increased. The Labour Government then took no action to alleviate the situation.
Now the situation is not so difficult. Many of the retired miners concerned will be better off financially, unless their rent is high, by forgoing supplementary benefit and claiming a rent rebate or allowance instead, because the recent increases in the needs allowances in the rent rebate and allowance scheme have altered the relationship with the comparable supplementary benefit scale rates so that people with small amounts of occupational pension are better off financially after paying rebated housing costs than they would be on supplementary benefit. In effect, they are taken above the supplementary benefit level but none the less qualify for a rent rebate or allowance.
The Supplementary Benefits Commission is in touch with the National Coal Board and the National Union of Mineworkers about the best way of informing the people concerned of the new situation. We are anxious that each individual—we are not talking only about miners—should know the position so that the right choice can be made for him. The hon. Member for Rotherham, in spite of the hard words he used, cannot deny that many of the miners concerned will benefit, either fully or partially, from the increase in the miners' pension as a result of the rent rebate and rent allowance arrangement.

Mr. Coneannon: To save the Department and the National Coal Board time, may I point out that I come from one of the better areas of the mining industry and I do not know of one case where what the Under-Secretary said will apply. I am sure that Members representing more distressed areas and which are not so affluent would be hard put to find cases which meet what the hon. Gentleman is saying.

Mr. Dean: I assure the hon. Gentleman that I have gone into this matter and have taken advice on it. It is not an easy matter to decide. A decision must be made in each case. But the Supplementary Benefits Commission is in close touch with the NCB and the NUM about the best way of informing people how they can benefit from the improvements. An article will be published in the NCB journal "Coal News" which will help to convey the information to the miners concerned. I make this plea to hon. Members opposite: in view of their knowledge of individual circumstances, will they please help us, because we are as anxious as they are to ensure that the many people who can benefit from the improvement in the miners' pension by readjustment under the housing finance arangements should benefit.
The hon. Member for Rotherham asked about the ex gratia payments on which we have been in correspondence. I glady confirm that an ex gratia pension is treated in the same way as an ordinary occupational pension—in other words, the recipient will have the £1 disregarded.
Turning to Amendment No. 4, this proposal has been made before, but it has always been resisted by successive Governments. The increments relating to graduated contributions are an integral part of the national insurance retirement pension, and the supplementary benefit scheme has always been regarded as essentially complementary to the national insurance scheme. It follows that retirement pensions, including graduated pensions, should be taken into account in full and attract no disregard. To disregard any part of retirement pension in determining entitlement to supplementary pension would result in providing twice over through different

parts of the state social security scheme for the same contingency, namely, income maintenance in retirement
The arguments which I would use against Amendment No. 5 are similar, although there is a special additional point. The existing disregards were carried over into the supplementary benefit scheme from the national assistance scheme into which they had been introduced in special circumstances in 1964. The circumstances were that an increase in the benefit paid for the children of widows was being made at a time when there was no uprating of national assistance scale rates, and the Government were unwilling to countenance the fact that many of the widows on national assistance would receive no benefit from the increase if it were to be taken into account as would have been normal.
They therefore decided that the amount of the increase then being made should be specially disregarded for national assistance purposes, although it was realised that this would create an anomaly. The present disregards of 38p and 28p are the same amount decimalised and rounded. These amounts have, however, no rational place in the present scheme of disregards, since they conflict with the principle that supplementary benefit should be complementary to national insurance benefit. As improvements in national insurance benefit result in its meeting more of a person's maintenance requirements, it is right—and generally accepted—that the rôle of supplementary benefit should correspondingly diminish rather than be maintained by the device of disregarding some of the national insurance benefit.
I draw the arguments together by saying that the Government recognise that there is a case, which becomes stronger with each year that passes, for an improvement in the disregards. We understand the case which has been put on behalf of one group of occupational pensioners today, namely, the miners. I appeal to right hon. and hon. Members of the Opposition to do all that they can to help us to ensure that each individual miner has the situation which is most advantageous to him in the present circumstances. However, an increase in the disregards is a call on resources. The Government will consider it along with other claims on the resources available.

Mr. Bidwell: I have been asked collectively to reply briefly to the Minister's remarks.
What the hon. Gentleman said hinged mainly on the miners and what might he called "the Irishman's rise". But the principles go much wider. I ask the Minister not to disregard the fact that they would apply equally if there should be similar movements in occupational schemes affecting railwaymen in general and the Transport and General Workers Union catering for the ex-employees of nationalised undertakings. The miners' rate of pension which has applied since nationalisation is a rate which applies over a wide front of nationalised industry. In this connection the Minister's reply was totally inadequate, although it was not altogether surprising. But he cannot disregard what will be a continuing situation for his Department.
When this Irishman's rise situation occurs, as it has in the past in the case of supplementary benefits versus standard rates of pension benefits by means of either a private scheme or the State retirement pension scheme, it always gives rise to a certain amount of disquiet. I understand that the majority of mineworkers are affected, which means that stories about how it does not affect some miners do not cut very much ice.
As the House will know, I speak against a background of considerable experience as a railway worker. The Minister said that he was pleased to announce that the ex gratia addition for many railway workers would achieve the £1 disregard. However it has not been uprated as much as we would have liked. In a sense, it makes matters worse.
If we accept the principle of such a payment for one section of nationalised industry to its old servants, as railwaymen used to be called, and this kind of situation arises where a contributory pension scheme is put up in more modern living circumstances, we do not ease the situation. On the contrary, we cause a great deal of disquiet because it does not apply universally. That is the difficulty.
I need not emphasise to the Minister that I have devoted a lot of my time to pensions both in Committee and in introducing two Ten-Minute Bills in this House. This problem could be overcome by putting into effect what is cur-

rently demanded by the Labour Party, which is a national retirement pension of £10 for a single person and £16 for a married couple. That would be a real advance when taken together with the new kind of nationalised industry payments which are emerging. What has happened in the mining industry will probably happen elsewhere, although it will not doubt require trade union negotiations. If that were to happen we should at last begin to get near a respectable sum for millions of our old people.
This debate has simply underscored the strength of the argument of the Labour Party. Only the other day at Watford my right hon. Friend the Leader of the Opposition committed himself to a considerable volume of shifting resources that the State retirement pension fund will require if it is to pay out sums of the kind that we propose. We are pledged to do that, and there will be no hanky-panky about it when we get another Labour Government, which will be soon.

Amendment negatived.

Bill read the Third time and passed.

Orders of the Day — INTERNATIONAL COCOA AGREEMENT BILL

Order for Second Reading read.

2.45 p.m.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I beg to move, That the Bill be now read a Second time.
The purpose of the Bill is to give effect to the International Cocoa Agreement, which was presented to Parliament in April. This Agreement is the fruit of many years of effort by successive Governments of both parties.
It has been the policy of Her Majesty's Government to support international commodity agreements where these are appropriate and are sought by the producing countries. Cocoa is certainly a commodity which justifies such an agreement. It is subject to severe price flucuations. In recent years the average monthly price has varied from under £100 per ton to some £500 per ton; such fluctuations are excessive by any standards. Moreover


cocoa is a crop on which some developing coutries, and in particular the major producer Ghana, are heavily dependent. Some of these countries have for many years been seeking through UNCTAD arrangements to bring greater stability to the world cocoa market. Indeed, in recent years many developing countries have come to regard cocoa as a test of the ability of UNCTAD and of the willingness of developed countries to achieve positive solutions in the commodity field. For these reasons the Government are very glad that the United Kingdom was able to take a leading part in the successful conclusion of the negotiations last autumn.
The Agreement seeks to reduce excessive price fluctuations and to assure supplies at prices equitable to both producers and consumers. It seeks to achieve this by means of two devices. The first is a system of adjustable export quotas which would apply to exports from member countries while prices were below a specified level. This level has been fixed at 29 United States cents per pound or about £250 per ton—well below current prices. Quotas would be adjusted during the year in accordance with movements of price below this level with the object of preventing the price falling below 23 cents per pound or about £200 per ton. Secondly, the agreement provides for a buffer stock to buy up cocoa in exporting member countries surplus to their export quota and domestic requirements. This cocoa is stored in order to be resold when the price reaches a maximum of 32 cents or about £280 per ton. Ideally, therefore, the Agreement would serve to keep prices within the range broadly of £200 to £280 per ton.
This is not an immediately attainable objective with world prices currently substantially above the top of the range envisaged in the Agreement, and with no buffer stock in existence to draw on. Indeed, it is a common criticism of international commodity agreements that they are better fitted to moderate price falls than price rises. There is inevitably an element of truth in this criticism since surplus supplies can always be kept off the market by an effective export quota system, whereas in times of real scarcity supplies cannot be created if they do not exist. Nevertheless, the present situation might well have been somewhat different

had this Agreement been in operation a year or two ago. The very low level of prices which obtained during parts of 1971–72 would have been moderated by the operation of export quotas under the Agreement. At the same time, the consequent sales of cocoa to the buffer stock could have provided a reserve which would have gone at least part of the way towards meeting the heavy deficit expected this year, which is a main cause of the recent very high prices.
For this reason, whatever the current market fluctuation, I have no doubt that the Agreement is in the long-term interests both of producers and consumers. No one benefits in the long run from cyclical swings of very low prices, leading to falling production, followed by very high prices leading to falling consumption. It is therefore in the interests both of consumers and producers to provide, as the Agreement does, the assurance of reasonable price levels necessary to enable producers to develop production to meet the expanding world demand for cocoa and cocoa products. This assurance is particularly necessary in view of the fairly long-term cycle of cocoa production and the past history of cyclical price movements, which is bound to be very much in producers' minds.
It is equally in the interests both of consumers and producers that there should be machinery to moderate, so far as possible, the inevitable price fluctuations caused by variations from one year to another in the relation between supply and demand—fluctuations due generally to the unpredictable vagaries of the weather.
The Agreement is one, therefore, in which exporters and importers can work together for their mutual benefit. It operates initially only for a three-year period, but the concept is continuing and long-term and the Agreement envisages renegotiation before the end of its term.
Under the Agreement both exporters and importers assume obligations. One of the principal obligations affecting both sides relates to the financing of the buffer stock. This is to be achieved by means of a contribution charged, at least in the first two years of the Agreement, at the rate of 1 US cent. per pound per annum —about £9 per ton—on cocoa and cocoa products first entering international trade.


It is the responsibility of exporting members to ensure that no shipments of bulk cocoa leave their shores without the presentation of a certificate showing that the contribution has been paid or secured. Similarly, there is an obligation on importing members to ensure that all imports of bulk cocoa, whether from members or non-members, are accompanied by such a certificate.

Mr. T. H. H. Skeet: The I US cent per pound per annum will not be payable by the Americans because American consumers are not signatories to the Agreement.

Mrs. Fenner: No. We hope that the United States Government will consider this point and become members. The purpose of this Bill is to provide the powers to enable Her Majesty's Government to fulfil this obligation. The Bill accordingly provides that imports of cocoa beans and cocoa products—essentially cocoa butter and cocoa paste—would be authorised only under a licence granted by the Secretary of State—in practice, the Secretary of State for Trade and Industry—who may include among the conditions of the licence presentation of evidence to Customs that any contribution chargeable under the Agreement had been paid or secured. The intention is that imports of these products from member countries of the Agreement should be authorised under an open general licence. This means that imports from these countries, which provide directly or indirectly over 98 per cent. of our imports of cocoa and cocoa products, will continue to he imported without quantitative limitation or other restriction, apart from the requirement of evidence that the contribution due has been paid or secured. Under the proposed economic rules of the Agreement it will be for exporters to provide this evidence to importers along with the shipping documents.
The open general licence would not apply to imports from non-member countries. These imports, which represent under 2 per cent. of our supplies of cocoa and cocoa products, would be authorised only under individual import licences. This is because imports into member countries from non-member countries will be subject to quotas based on past imports and which member states

must observe when the world price is below 32 cents per pound—£280 per ton. A similar system has been operated in the case of coffee and sugar in the context of the International Sugar and Coffee Agreements. When the price is below this level the individual licences will be issued only within the limits of the quotas, but in all cases imports will be subject to the same conditions as operate under the open general licence.
The administrative arrangements for applying the International Cocoa Agreement have been worked out in close co-operation with the cocoa trade and industry. I should like to pay tribute to the unstinting help they have given to the British Government over many years by way of technical advice and expertise, both in the long negotiations for the Agreement and, more recently, in the detailed preparations giving effect to its provisions. The success and effectiveness of the Agreement, when in operation, will be due in no small measure to their efforts. The House will also wish to know that Her Majesty's Government have offered London as the site of the permanent headquarters of the International Cocoa Organisation when it is set up. We very much hope this offer will be accepted.
An interim committee, comprising representatives of all the signatory Governments, is meeting in London this week to conclude preparatory work for the coming into operation of the Agreement. The hope and aim of all the signatory Governments is that this Agreement can be set fully in operation in time for the beginning of the 1973–74 crop year on 1st October next. Only in this way would it be possible to maintain the impetus achieved at and since the negotiations and to enable the machinery of the Agreement to be established and settle down before it is subjected to the stresses which would arise with the downward phase of the price cycle. If this objective is to be achieved, however, it would be essential for Her Majesty's Government to obtain before that date the powers set out in this Bill. Meanwhile, the United Kingdom has undertaken to apply the Agreement provisionally. We hope that not only the United Kingdom, but the other member States of the European Economic Community and the Community as a whole


will be in a position to apply the Agreement on time.
The licensing provisions for which the Bill provides constitute the small contribution that the United Kingdom is asked to make to set on foot the first international agreement for a new commodity for over 10 years. The concept of international commodity agreements is currently passing through a testing time. The future of the International Sugar Agreement is currently under renegotiation. The International Coffee Agreement, which operated so successfully for nearly 10 years, has recently experienced serious difficulties and can be continued, at least for the time being, only at a much reduced level of activity. The successful launching of the International Cocoa Agreement at this juncture would therefore give a much needed fillip to the concept of mutual co-operation between exporters and importers on an international plane. I hope that the House will show support for this concept by giving this Bill a speedy passage.

3.0 p.m.

Mr. Eric Deakins: We on the Labour side of the House warmly welcome and support the Bill and the International Agreement to which it seeks to give effect. Perhaps I could express the hope that our provisional acceptance of the Agreement will become a definite acceptance as quickly as circumstances permit.
The Minister emphasised the importance of this Agreement to some of the poorest countries in the world. Most of those producing cocoa have gross national products of less than 400 dollars per head per year, which is very low indeed. Some have even less than 100 dollars per head per year. Two of the major countries, Ghana and Nigeria, are Commonwealth members.
The hon. Lady talked of price fluctuations from year to year and gave some appalling examples. It is a fact that cocoa appears to have had the most unstable price record of any major internationally traded commodity since the war. The Agreement obviously aims to reduce these fluctuations and to reduce them not only in the interests of consumers but also in the interests of exporters. These fluctuations must have had an adverse effect on the domestic

economies of the exporting States, upsetting and probably inhibiting their medium-term planning for economic development.
We must therefore look for some form of market regulation discipline and this the Agreement embodies, so that exporting countries can rely on a more regular supply of export earnings from cocoa. The Bill shows that as a major importer we are prepared for the necessary discipline to achieve that end. I believe that even the most ardent advocate of free enterprise in commerce must admit that poor States, almost entirely dependent on cocoa exports, cannot be left any longer to the tender mercies of the free market.
The financial aspects of this Agreement are complicated. There is the financing of the buffer stock arrangement by three separate methods—partly levy, partly by deferred payment and partly by IMF support. It is interesting to note that the Explanatory Memorandum says that there is to be no financial burden on the British Exchequer.
The Agreement ought to come into force at the end of this month. Time is pressing. It must do so, as the Minister pointed out, because the world cannot at this juncture afford another failure of an international commodity agreement. However, there seems to be some doubt about this. First the fact that the United States is not yet a signatory is a factor which could wreck the Agreement almost before it is started, unless the United States, without being a signatory, is prepared to co-operate with the member countries on the price that it will pay for cocoa.
Can the Minister say something about whether the Government are putting mild pressure on the United States, asking it to abide by the principle of the Agreement even if technical and other domestic reasons prevent it from becoming a signatory at present?
My second doubt concerns West Germany and Holland, both affected by the position of the United States. Are they, as partners in the Common Market, likely to ratify this Agreement by the end of June'? If not, I wonder whether the Government will make every effort, official and unofficial, to try to persuade


them to do so. because it is very important.
This raises the prospect of the Agreement coming into force at all. Perhaps the Minister will not want to say anything at this stage but I wonder what action the Government are contemplating if it does not. Would they, for example, press for a reconvening of the International Cocoa Conference under United Nations auspices? One thing is certain—if this Agreement does not work we cannot afford to wait another 16 years before there is a prospect of a viable international commodity agreement in cocoa.
The Agreement is the test of international co-operation to help the poor countries. Ultimately, trade between rich and poor is much more important than any conceivable volume of aid from rich to poor. This Agreement is a major step forward to international sanity in trading relations between rich and poor states. We should use every endeavour on all sides, in the House and outside, to see that it begins to operate and that when it does it operates effectively.
Even with the Agreement in operation for a minimum of three years, there will still be difficulties for exporters because of the vagaries of weather and disease, but this at least is a step forward to reducing and resolving their trade problems. The Agreement is an example of what should be done for other primary commodities which have also suffered wild price fluctuations in recent years. The United Kingdom has played a valuable part in the tricky and lengthy negotiations leading up to the conclusion of the Agreement. I hope that we will keep up this good work by expressing our independent views in negotiations for future international commodity agreements, without regard to our membership of the Common Market.
The United Kingdom has much to contribute in these matters from its long experience as an international trading nation, and it is vital that in future our views continue to be expressel directly in the world-wide forums of the United Nations trading conferences and the General Agreement on Tariffs and Trade where these issues are discussed from time to time.
Finally, I hope that we can speed the Bill on its way as a sign to the world that the United Kingdom at least is taking this important international obligation very seriously.

3.7 p.m.

Mr. T. H. H. Skeet: The Minister has made a very good case, which I support entirely, except for her reference to the Agreement being in the interests of producers and consumers. Certainly, it is in the interests of producers but not necessarily of consumers. Prices today are very high and this Agreement will do nothing to prevent them rising to excessive levels. It simply provides a bottom end below which prices will not fall, at which the stop will come into operation and buying will start on the open market.
As prices rise higher, there will be no stocks available to sell, prices will continue to rise, so one must assume that the consumers, both in the United Kingdom and Western Europe and in the United States, will have to pay higher prices for their chocolate. We must expect higher prices for chocolate in the High Street in future.
But having expressed some anxiety about the attitude of the United States, one has to look at their position and to ask why they have not come into this Agreement, when they control 25 per cent. of the importing market. They have adopted a rather curious line on the coffee agreement, the sugar agreement, and on tin. While it is sad that they have refused to participate in these arrangements, they have at least adopted an unofficial acceptance of at least two of these arrangements.
They put forward in the negotiations support for what is known as sales quotas rather than export quotas. I should have thought that there was an argument for this proposition which takes into account the trade before exports arise and therefore the full operation of what is known as the futures market.
The hon. Member for Walthamstow, West (Mr. Deakins) indicated that the hoped for ratification would be pursued by Western Germany and Holland and I share his hope. But because the United States is outside the Agreement, the non-signatories will be in a distinctly preferential situation. They will not pay the I


per cent. levy and will have all the advantages of a free-market operation.
In current prices, the spot price for cocoa now is 73 cents a pound, in the futures market in July 65 cents,. a pound and in September 63 cents. The figure for September, 1974 is 51 cents a pound. One is led to the conclusion that there can be a revision of quotas to take into account what may happen in the market. I consider that whether the prices rise or fall will depend on the availability of the cocoa bean in the market and we are painfully aware that in Nigeria there have been extensive fires in the Western region, which have savaged the crop, and that in Ghana and the Ivory Coast, which produce a large part of the crop, drought conditions have been the worst for the past seven years. In Brazil also there has been a partial failure of the crop.
The Opposition will appreciate one point of economics—that where there is a shortage of supplies inevitably it affects prices. As there has been no sign of any abating consumption, prices will tend to rise quite dramatically. This is the most complicated commodity arrangement ever contrived in international markets and that must militate against its possible success. I am glad that we have subscribed to it. I sincerely hope that it will work.
My hon. Friend the Parliamentary Secretary to the Ministry of Agriculture may consider that this is more successful than the OPEC arrangements, in which we do not participate and in which countries in the Middle East have been able to impose on the world the prices they think fit. In this case it is different and more equitable.
Among consumer interests of the importing States, at least the EEC Commission has participated and Germany is a signatory. Indeed, all members of the Common Market have joined. I believe that the Soviet Union has done so as well, and Japan also, although Japan is a small consumer. In fact, the signatories total about 35 nations, representing about 69·83 per cent. of total importers. It is therefore rather unsatisfactory that the United States, with 25 per cent. of the market, has not come in. Perhaps my hon. Friend can give us some idea why Czechoslovakia and Poland are also in a recalcitrant mood.
I fully endorse the argument that we have to do something for the developing territories, dependent as they are upon commodity prices. Six exporting countries account for 92·9 per cent. of basic quotas. Ghana accounts for 36·7 per cent.; Nigeria, 19·5 per cent.; the Ivory Coast, 14·2 per cent.; Brazil, 12·7 per cent.; the Cameroons, 8 per cent.; and Togo, 1·8 per cent. This makes a total of 92·9 per cent.
Cocoa, of course, accounts for the principal part of Ghana's foreign exchange earnings and, therefore, the livelihood of the people of Ghana depends upon the product. Almost the same argument applies to the Cameroons and Togo. The West African producers account for about 75 per cent. of cocoa beans sent to the world market and Latin America and the Caribbean account for 25 per cent., half of which comes from Brazil.
I therefore conclude that this is a most satisfactory arrangement. I see scope for many more in the future, because this is a sensible way of moving ahead in international trade. It operates in a rather neat way, as my hon. Friend the Parliamentary Secretary explained. When the price falls to 23 cents. the buffer stock, which will ultimately be very considerable, will begin to operate. The International Cocoa Organisation will begin to buy on the world market to sustain the price. When the price rises to 32 cents. and above, free market conditions will prevail because the buffer stock sales will begin to feed the market. Regrettably, at this stage there are no buffer stocks available. From 29 cents. and below there will be mild quotas or rigid quotas as the case may be.
The purpose of the Agreement is to bring in export quotas, a buffer stock of 250,000 tons, arrangements for diversion to non-traditional materials such as raw materials for margarine, cooking fats and soap and mechanism to maintain prices between 23 and 32 cents.
The House must welcome the arrangement. I hope that my hon. Friend the Parliamentary Secretary and her advisers will seek to ensure that the United States of America comply with the provisions, if not in the legal form, at least in the letter of the arrangement, because it is very important to the developing world that success should be achieved. I concur with the argument advanced from


the Opposition that trade is the best way to sustain the livelihood of the developing economies and certainly not aid, which can be dissipated on so many occasions.

3.17 p.m.

Mrs. Fenner: I ask the leave of the House to speak for a second time.
I am grateful to hon. Members for a brief but very interesting and constructive debate. To take, first, the point raised by the hon. Member for Waltham-stow, West (Mr. Deakins) and my hon. Friend the Member for Bedford (Mr. Skeet) about the non-participation at this time of the United States, the Agreement depends essentially upon controls at the exporting end. Exporting members together account for nearly 90 per cent. of world exports.
The United States of America have declared their willingness to co-operate with the International Cocoa Organisation in any way they can. Nevertheless, Her Majesty's Government would greatly welcome a decision by the United States' Government at any time in the future to participate in the Agreement.
The hon. Member for Walthamstow, West asked also about the situation with regard to West Germany and Holland. Both countries are seeking legislation, and both hope to ratify, or give an undertaking, or make a provisional application, by 30th June.
I was also asked what would happen if there was no automatic entry. The Secretary-General of the United Nations would have to convene an urgent meeting to consider whether the Agreement could be applied in those circumstances.
In answer to my hon. Friend the Member for Bedford, it is a fact that it is not possible for the United States to control prices under an agreement to which they do not adhere.
Again, on the question of United States' non-participation, I remind hon. Members that the exporting members, who account for nearly 90 per cent. of the world's exports, will be determining market levels in accordance with the provisions and decisions of the Agreement.
My hon. Friend took up the point that I made earlier about the Agreement not being able to create supplies that are

not there. However, in the longer term it should lead to avoiding extreme price fluctuations. In times of surplus it should prevent prices falling dramatically and it should help to meet or to reduce shortfalls in later years. Secondly—the hon. Member referred to producers having confidence to plan in the long term—the Agreement should provide for necessary confidence to enable producers to develop production in line with the expanding demand to which my lion. Friend referred.
Beyond those points—I trust that I have covered them all—there is little that I can add. Successive Governments have participated in all the major commodity agreements—sugar, coffee, tin, wheat, and even olive oil in which we have no significant interest as a consumer.
We support the principle of international co-operation to tackle the problems of primary commodities. That support is particularly appropriate in the case of cocoa—a point that the hon Member for Walthamstow, West made—in which there is such a strong Commonwealth interest, and presents the first opportunity to all the members of the European Economic Community to give effect to the commitment in the Paris summit communiqué to the promotion, in appropriate cases, of agreement concerning the primary products of developing countries.
For these reasons, I urge the House to give the Bill a Second Reading and a speedy passage.

Mr. Skeet: Before my hon. Friend sits down, may I point out that according to Gill and Duffus,
… continuing uncertainty about the dollar and a considerable increase in the dollar price of gold may have contributed to a rush into cocoa in New York.
We have a bracket of 23 to 32 cents. May we not find that there will be a revision of the price range due to the weakness of the dollar, or would my hon. Friend be prepared to support that?

Mrs. Fenner: There is provision for a review of the price range before the end of the second year, under Article 29 of the Agreement. There is also provision for consultation in the event of the par value of the US dollar or the £ sterling changing. The exporting members of the interim committee have asked for this


latter issue to be discussed at the first meeting of the council. In answer to my hon. Friend, I could not anticipate at this stage what the outcome of this discussion might be.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Commitee of the Whole House.—[Mr. Murton.]

Committee upon Monday next.

Orders of the Day — GUARDIANSHIP BILL [Lords]

As amended (in the Standing Committee), considered.

New Clause 1

STAY OF EXECUTION

Upon the making of an order for custody of a minor under any of the enactments referred to in this Act, the court may upon application of any of the parties before it or of its own motion make an order for a stay of execution in respect of the order for custody and separately or additionally make an order that the minor shall not be taken out of the United Kingdom without the consent of the court.—[Mr. John Fraser.]

Brought up, and read the First time.

3.22 p.m.

Mr. John Fraser: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. E. L. Mallalieu): With this, we shall discuss the following amendments:
No. 4, in Title, line 5, leave out 'section 9 of'
No. 5 in Title, line 8, leave out 'section 4(2) of'

Mr. Fraser: I have been asked by my hon. Friend the Member for Newcastle-upon-Tyne, West (Mr. Robert C. Brown), whose name appears with mine to this clause, to say that he is sorry that he can not be in the House today. He has been a persistent and dedicated proponent of the rights of parents when their children are removed from their jurisdiction, and one ought to pay tribute to that fact and regret that unavoidably he cannot be here today.
This clause is modest, and I believe it provides the absolute minimum for deal-

ing with the predicament which was widely publicised by the Desramault case. In that case an order was made for the custody of a child. That child subsequently went to four different countries where the custody of the child was fought. There were numerous court applications and eventually, happily perhaps, the child returned to this country.
What the Desramault case illustrates is some weakness in our law. The magistrates, when they heard the case, failed to do two things. First, they failed to make an order for a stay of execution, and secondly they failed—indeed, they could do nothing else—to insert a clause in the order to prevent the child from being taken out of jurisdiction. Subsequently the High Court reversed this decision, but it was too late. The child had left the country.
The problem about the stay of execution was this: no application was made to the magistrates. The magistrates at the time were not clear that they could make a stay of execution. That doubt has subsequently been dispelled in the case Smith v. Smith. The clause puts into statutory form the decision in that case.
The second failure of the magistrates was to make no order that the child should not be taken out of the jurisdiction without the consent of the court or of the other parent. The problem here is that there was considerable doubt on the matter at the time, and, having done some further research myself, I believe that, in fact, the magistrates had no power to make an order restricting the removal of the child from the United Kingdom.
The Desramault case was, perhaps, the widest known, but there are others. Recently, a child was removed from the jurisdiction and taken to Algeria, a country where, I understand, the rights of the father to have custody of a child are paramount, unlike the test in this country which is directed to the paramount interests of the child. This case received some publicity because the mother was able to fly promptly to North Africa and try to do something there, but there are many cases about which we read nothing in the Press, unpublicised and unhappy cases in which children are suddenly and permanently removed from the custody of or access by the other parent


and in which, because of a lack of money and inability to fight matters in other countries, nothing happens and nothing is heard.
Certain administrative actions could reduce the risk of the Desramault situation arising again—for instance, thorough checks on passports and observance of requests to the Passport Office that a passport should not be issued for a child without the consent of the other parent where there is an order of the court. But here we come up against the difficulty dealt with in the second part of the new clause, that at present magistrates cannot make an order that the child shall not be taken out of the jurisdiction.
I am the first to agree that what is needed is international action such as we had on the Maintenance Orders (Reciprocal Enforcement) Act, and I was pleased to know from the Committee proceedings that the Minister is actively pursuing agreement of that sort with our partners in Europe and other countries which have laws similar to our own. But we must in the meantime try to prevent a situation in which one parent may all too readily remove a child out of the jurisdiction.
At worst, the child disappears without trace. At best, the parent who has taken the child will play hide and seek with it, a child of tender years, dodging from country to country, choosing jurisdictions which are the most obstructive or which are the most favourable to the abducting parent.
At the end of the Committee proceedings—this is column 40 of the OFFICIAL REPORT—the Minister gave an assurance that he would try to improve the situation. The new clause is the barest minimum legal protection to cover cases of this kind, and I hope that he will receive it sympathetically. The wording may not be perfect. If it is not, the matter can be dealt with in another place. If, however, the clause is not accepted, nothing can be done in the other place, since that is where the Bill started.

3.30 p.m.

The Minister of State, Home Office (Mr. Mark Carlisle): I listened with sympathy to all that was said by the hon. Member for Norwood (Mr. John Fraser), but I have to say that, on reflection, I cannot advise the House to accept the

new clause. I fully understand what the hon. Gentleman said about his hon. Friend the Member for Newcastle-upon-Tyne, West (Mr. Robert C. Brown), who has been active in attempting to remedy what he believes to be a gap in the present law in this respect, arising out of the Desramault case which originated in Newcastle. I fully accept that there are good reasons why he cannot be here today to move the new clause.
In Committee, I said that I would look again with sympathy at the problem. We have looked at it again, but, on further reflection, I must stand by the view which I then expressed, that, while appreciating the concern in this matter, I do not believe that an amendment to this Bill is the way to deal with it.
I have a few comments about the intention behind the clause and about why I do not think it either necessary or desirable that it should come into force in this way. It has two purposes. First, it seeks to put into statutory form the fact that the court of its own volition has the power to make a stay of execution in a guardianship order. The second purpose is to provide a new power for the magistrates' court to be able to make an order that no minor should be taken out of the United Kingdom other than with the consent of the court.
I am satisfied that the first aim is not necessary and might well have the effect of muddying the law rather than clarifying it. It is now abundantly clear that the court has the power to make a stay of execution in any application that comes before it. The hon. Member is correct in saying that at the time of the Desramault case no application was made for a stay of execution, and I understood, as he did, that the court, although mindful of the desirability of making a stay of execution in that case, felt that it had no power to do so other than on an application being made to it.
However we now have the case of Smith v. Smith decided in 1971 where the divisional court made it absolutely clear that while the first responsibility for applying for a stay of execution rested on the applicant to ask for such a stay, if no such application is made the justices themselves should consider whether a stay is appropriate and apply a stay of execution on their own order. That was approved by the divisional court in that case.
On the other hand if one were to make that clear statement of the existing inherent power of the court and put it into statutory form in the Bill, that might cause doubts as to whether there was an existing and clear inherent power in other areas of the law where it had not been stated in statutory form. Of course, I must make the point that we are dealing here, in spite of the ingenuity of the drafting of the clause, with applications for custody in guardianship proceedings and not the far wider applications in the matrimonial proceedings in magistrates' courts when the application for custody goes along with the claim for custody by the parent on his or her own behalf.
To state specifically in statutory form that in applications under the Guardianship Act the court has the power to make a stay of execution might have the effect of throwing doubt on whether that power exists under proceedings brought under any other Act where it was not statutorily referred to. It might be said that there was a need to put it in statutory form in the Guardianship Act because of the doubt of the existence of the common law power to grant a stay of execution.

Mr. John Fraser: I thought of it. That is why I have so drafted the amendment that it says:
Upon the making of an order for custody of a minor under any of the enactments referred to this in this Act".
The 1960 Act is referred to in it.

Mr. Carlisle: As I have said, I did not want to take technical drafting points, because it is unfair to do so, and the hon. Gentleman has made a brave attempt. I realise that presumably that phrase was intended to achieve his object. But I am not sure whether
the making of an order…under any of the enactments referred to in this Act
would have passed the scrutiny of parliamentary counsel if the Government had accepted the clause. We should have had to tighten it up, and then we should have had to decide whether to stick to the position that we have taken throughout the rest of the Bill, namely, that its purpose in so far as it affects previous legislation, as well as giving the wife equal rights of guardianship to those of her husband, was to bring into legisla-

tion the existing law on guardianship applications, to coincide and correlate with those in matrimonial proceedings under the Matrimonial Proceedings Acts. It was not the intention in the Bill to change the substantive law as it applied in those Acts.
Therefore, I do not feel that the first half of the clause is either necessary or desirable. But the point raised, and the purpose of trying to prevent children from being taken out of the jurisdiction of the courts while there is still an issue as to their custody is one which we have very much in mind.
As I said in Committee, two working parties of the Law Commission are sitting, one of them dealing with matrimonial proceedings in magistrates' courts and the second dealing with jurisdiction and enforcement in relation to custody orders. We have drawn the attention of the Law Commission to the problem that was raised in Committee and what was said then. I also undertook to consider not only whether Smith v. Smith should be put into statutory form but what could be done to draw that decision to the attention of the courts. I understand that in the May edition of The Justices' Clerk there was a full article about the effect of the Smith v. Smith decision. We are also quite prepared to ask magistrates to be reminded of the existence of the power at any talks and training given to justices.
I turn to the second part of the intention of the clause, which is to give what would be a completely new power to the lower courts to make an order that a minor should not be taken out of the United Kingdom without the consent of the court. It is not apparent how application would be made or how it could be altered later, but that is a small point. My general point is that no such power now exists in the magistrates' courts, and the clause would grant to lay magistrates a substantial new power that needs much wider consideration. The matter should be examined by the Law Commission working party in its review of the work of the magistrates' courts in this aspect of law generally.
Secondly, there is the genuine practical problem of how to enforce the order. It is true that there is now procedure by which any person can obtain


an order prohibiting the taking of a child out of the jurisdiction of the court without the court's consent by applying to have that child made a ward of court in the High Court. I should like to say two things about that.
First, it is a relatively simple procedure. Legal aid is available in wardship proceedings. An emergency legal aid certificate can be obtained almost immediately in the event of need. The hon. Member, as a practising solicitor, will know that all that is necessary to bring it into effect is for the parent concerned to make an application to the High Court for an originating summons and, by virtue of the 1949 Act, the child becomes a ward of court immediately the summons is issued but ceases to be so unless an appointment for the hearing of the summons is obtained within 21 days. Therefore, the application is sufficient to render, for a period of three weeks, it unlawful to make any attempt to remove the child from the jurisdiction without the High Court's permission. Such an application can be made at once.
We must consider the effect which widening the power of the magistrates' court would have on the arrangements made to enforce a High Court wardship order. We must face the fact that the number of people travelling in and out of this country has increased so enormously in the past 10 or 20 years that a stop order of this kind continues to be effective only if it is made in a limited number of cases. In 1970, 18·2 million British passengers moved in and out of the country and the number of aliens passing through the ports had increased to 10·6 million. With that volume of people, the effectiveness of the order depends on the immigration people having only a relatively few cases to watch out for, yet in 1972, under the High Court procedure, the Home Office was consulted about the institution of precautions in 330 cases. The new clause would give a wider power to magistrates' courts than exist in the High Court, because it refers to the United Kingdom, which includes Northern Ireland and Scotland.
While being sympathetic to the purpose of the new clause, and assuring the hon. Gentleman that I shall draw the attention of the Law Commission to the

points which he has made, I do not think that the Bill is the appropriate means by which to implement this change in the law. I do not think it desirable, within the parliamentary timetable, for the Bill to have to go back to the Lords and be amended in order to put the drafting of the clause in order and then return to this House when it is at the end of its passage through Parliament.

Mr. John Fraser: We are always up against the difficulty that if the clause is in the right form the time is wrong. If the time is right, the place is wrong.
However, I am comforted by the assurance that this matter is now under consideration by the Law Commission and that the point raised in Committee and today will be taken into account by it. I hope that eventually we shall find the right form, the right time and the right place to remedy this injustice. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Motion made and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Readings), and agreed to.

Bill accordingly read the Third time and passed, with an amendment.

Orders of the Day — GOVERNMENT TRADING FUNDS BILL

Order for Second Reading read.

Motion made, and Question put forthwith pursuant to Standing Order No. 66 (Second Reading Committees), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

DOUBLE TAXATION RELIEF

Motion made, and Question put forthwith pursuant to order [22nd March],
That an humble Address be presented to Her Majesty, praying that the Double Taxation Relief (Taxes on Incomes) (Denmark) Order


1973 be made in the form of the draft laid before this House on 1st March.—[Mr. Murton.]

Question agreed to.

Motion made, and Question put forthwith pursuant to order [22nd March],
That an humble Address be presented to Her Majesty, praying that the Double Taxation Relief (Corporation Tax) (Republic of Ireland) Order 1973 be made in the form of the draft laid before this House on 9th May.—[Mr. Murton.]

Question agreed to.

Addresses to be presented by Privy Councillors or Members of Her Majesty's Household.

AFRICAN DEVELOPMENT FUND

Motion made, and Question put forthwith pursuant to order [22nd March],
That the African Development Fund (Initial Subscription) Order 1973, a draft of which was laid before this House on 18th May, be approved.—[Mr. Murton.]

Question agreed to.

ALKALI INSPECTORATE [MONEY]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session to increase the powers of the Alkali Inspectorate in cities in order to reduce or eliminate the emission of all waste or toxic gases which pollute the atmosphere, it is expedient to authorise the payment out of moneys provided by Parliament of—

(a)any expenses incurred by the Secretary of State or the Alkali Inspectorate under the said Act; and
(b)any increase attributable to the said Act in the sums so payable under the Alkali &amp;c. Works Regulation Act 1906.—[Mr. Murton.]

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Murton.]

Orders of the Day — HOUSING (RENTS)

3.46 p.m.

Mr. Hugh Jenkins: I wish to raise the subject of the consequences of Government policy on the rents of privately-owned dwellings. I apologise to the Minister for the fact that the subject of the debate has been changed, but I did my best to give him as much notice as possible so that he should not

come here without being fully informed of the nature of what I had to say. I say that as a preliminary because I shall be severely critical of Government policy —there are times when it is one's duty to be severely critical, and this is one.
I draw attention to the way in which property companies are using the Government's rent legislation to exploit their tenants. The examples that I shall take are from my constituency, though what is happening is widespread, as is well known, certainly all over London, and probably other great cities, too.
One of the most unscrupulous—and that is the word I must use—of the companies exploiting the present situation is the Freshwater company. Among many others it owns blocks of flats in my constituency. One example is the block next to that in which I live, University Mansions in the Lower Richmond Road.
The company uses rent officers as its agents as a means of extortion, so that the officials willy-nilly become, as it were legalised Rachmans. As they have the law on their side, they have no need of thugs or dogs to intimidate the tenants.
In case that is thought to be an exaggeration, I should like to point out that there is no doubt that the tenants are intimidated. I take an example from this block. It is an oldish block and many elderly people live there, paying rents that have rapidly increased from the small rents that they have paid for 20, 30, or even 40 years.
The lift in one of these blocks was out of order for six months. For four months it was locked so that it could not be used, and for six months an 84-year-old lady who lived in a top floor flat had to walk up and down 100 steps. That is not only intimidation; it is torture. That is an example of how people are being "encouraged" to vacate premises so that they may be let to people able to pay bigger rents.
I take as another example the case of 78-year-old Mr. Thick of No. 7, University Mansions. He has lived there for more than a quarter of a century. His rent has been quadrupled, from £2 to £8 a week. Freshwaters fixed this with the full co-operation of public servants by the trick of getting one flat empty, doing it up and letting it to four men. A rent of £600—the market rent—was agreed


and accepted by the rent officers as being the fair rent. In other words, the market rent has now become accepted as the fair rent, and that is precisely the opposite of the intention of my right hon. Friend the Member for Coventry, East (Mr. Crossman) when he introduced his Bill in 1965.

The Under-Secretary of State for the Environment (Mr. Reginald Eyre): Did not the hon. Gentleman say that the tenant to whom he referred was paying a rent of £8 a week?

Mr. Hugh Jenkins: Yes, I did. I see the hon. Gentleman's point, and I will come to it in a moment. The £600 rent was for a better flat than that presently occupied by Mr. Thick. But it set the standard, in that £600 has become the standard rent for flats in that block. This practice is being adopted widely. A single flat is accepted as the standard and all flats in that block and in the area are set against that standard.
Mr. Thick, a spirited and intelligent man, appealed to the committee against his assessment. It seems to me that the rent officers betrayed the brief under which they were appointed and became the strong-arm men of the extortionists by co-operating with them. In this case the appeal committee, which is supposed to protect tenants, did no such thing. It, too, became agents of this near-Rachmanism.
Alone, my constituent, with no knowledge of what was to happen, faced another battery of Freshwater stooges, this time a squad of four lawyers—people who apparently can be paid to do wrong as well as right. My constituent was given no warning that he would be faced with legal opposition. If he had been he would have applied for legal assistance.
Mr. Thick went before the committee. The opposing team of lawyers placed upon the table a massive document of appeal setting out their case. My constituent had no warning, and the appeal committee made no attempt to protect him. Instead, it allowed him—a man of 78—to be exposed to this without any legal protection.
As I say, Mr. Thick is a very intelligent man. He was intelligent enough

to know that he was at a grave disadvantage in appearing against four lawyers. He tried to get the matter deferred. The appeal committee refused his request. At the end of the hearing, it increased my constituent's rent to £440 a year. If that is not acting as the agent of extortionists, I should like to know what is. By its action the committee volunteered to assist in the process that is developing all over London, and I have no doubt that the committee members went home feeling that they had done a good day's work in sending my constituent, for the first time in his life, to a local body with a view to trying to get some help to meet his rent.
The rent will not go up immediately to £8-odd a week. It goes up in stages, and has now reached £4. Since my constituent is 78 years old, his income is hardly likely to increase. It means that he will get further and further into public debt, as he sees it.
The Act ought to have a new Title:
A Measure for the further improverishment of the poor by the wealthy.
It is no good the Minister's telling me that this system was invented by my right hon. Friend the Member for Coventry, East. Some of us told my right hon. Friend at the time that this bright notion of his would prove to be a stinker. That is just what it has turned out to be. But who can doubt that, if my right hon. Friend were still in office today, he would have seen and corrected his error? This Government's sin is that they appear to condone and encourage the exploitation which has come about as a result of my right hon. Friend's foolish error. My right hon. Friend no doubt thought that his measure would bring down rents. In fact, he said so at the time. However, some of us doubted it. When the contrary is proved—when the Act is proved to be increasing rents and not reducing them—to fail to take action and to allow it to continue is worse than error. Indeed, it is condonation.
Freshwaters and others have exploited the Act, and the Government have done nothing. They have expressed regret, but the exploitation goes on. They know that rent officers have been bribed—no doubt with bottles of whisky to drown their twinge of conscience at having exploited the poor in a way that even Rachman


would have regarded as heartless. A great deal of fuss has been made about this scandal. But what will be done about it?
I have now finished the rough-words part of what I have to say. I think that these rough words are necessary. When one sees exploitation of constituents on this scale, whatever the excuse or reason, one has a duty to be rough on their behalf. Whether the landlords in these blocks of flats—many of them have changed hands recently—are called First National, Berger, Daejan, or whatever it is, makes no difference.
I hope that we are seeing the death throes of private landlordism. However, in this process it is my constituents and not the landlords who are getting thrashed. My constituents need the protection of the law, and without further delay. What is more, they need it retrospectively, so that some of the grave injustices done in the name of the law, such as that to Mr. Thick, can be rectified.
I hope that the Wandsworth Borough Council and other authorities—and perhaps the GLC—will expropriate the expropriators by compulsory purchase. Will the Minister agree to a compulsory purchase order in circumstances when a block contains only one or two unoccupied flats? Will he tell us whether, if Wandsworth Borough Council applies for a compulsory purchase order to acquire University Mansions, the Secretary of State will grant it? If he cannot commit himself completely, will he say whether there is a good chance that he will grant a compulsory purchase order to the council?
What price, then, should the Wandsworth Borough Council have to pay, assuming the Minister agrees? Is it to pay Freshwaters and others a further reward for their Rachmanism, and thus be forced to compound it themselves? If the council pays a price reflecting the new unfair rents, it will have to continue them. It will not be able, except by a heavy specialised subsidy, to reduce the rents if the price for the block is the current valuation. What will the Minister do about that?
I suggest that the price should not reflect scarcity value any more than rents were intended to reflect scarcity value. There should be a recognition of the

undesirability of scarcity value not only in the ownership of property but in the rental value. If we do not recognise the scarcity value element in the price of property as a whole, it becomes hard to reflect it in the long run in the rental value of the property.
I suggest that the Government should take a fresh look at this subject. The price for this property should be based on its value in 1965, or 1970 at the latest, plus an addition to allow for the increase in the cost of living. That would be a reasonable accretion instead of a Rachmanised accretion.
Ways must be found for local authorities to purchase. I hope that the Greater London Council will find such ways—that the beneficent management of my wife, who is Chairman of the Greater London Council Housing Management Committee, will be extended over wide areas of London and that that management will be operated in the interests of the tenants and not the landlords. If local authorities cannot do this the companies will continue the process that they have already started, which is almost equally worrying, of avoiding the odium——

It being Four o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins.]

Mr. Jenkins: I was saying that companies are beginning to regard the position of landlord as one which has paid off handsomely in the past but is no longer paying off quite so handsomely. Landlords are beginning to adopt the practice of selling flats to tenants, whom they continue to exploit by imposing exorbitant service charges, over which there is no control—not even "phony" control. The long-term lease is sold to the tenant, service charges are paid, and the landlord derives the benefit of those service charges—which are greatly in excess of the cost of the services—without attracting the odium of being an exploiter of tenants.
Mr. Thick's rent book and the record of the rent assessment committee's hearing tell a grisly tale, in which all concerned appear to have conspired to defraud my constituent by charging him a


market rent and then calling it a fair rent. It is grossly unfair, and if I were a member of the Church I think I would call it sinful. In his rent book, Mr. Thick's new landlords are described as DAEJAN Properties. That is one of the many companies owned by the Freshwater family, who have acquired a personal family income beyond the wildest dreams of Rachman. It is over £500,000 a year. This one company of DAEJAN made a total profit of nearly £2 million in 1970.
All this money comes from the pockets of the poor and medium-income people. My constituent can apply to the State or to the local authority for help. The local authority is already acting as the medium of State help. Why should my constituent be forced to do this after 78 years without asking anyone for anything? It is criminal. Wandsworth Borough Council has agreed to help with the aid of the provisions laid down by the Government. Even with a rent allowance of £1·91 my constituent's income will still be below subsistence level.
The Chairman of DAEJAN is the Earl of Stradbroke. What does he think about it? A member of the board is Mr. D. M. Mountain, who is the managing director of the Eagle Star Insurance Company—the main backer of the whole operation. The original capital was found by Eagle Star, and it continues to be, because further profit is made from the estate by having mortgages on most of the properties.
The Eagle Star gave £5,000 to the Conservative Party last year. To be allowed to fleece the public at this level it seems to be fairly cheap. To be allowed to go on doing it at public expense seems to be worth more than £5,000. I think that a contribution of at least £50,000 would be called for to show the company's full appreciation to the Conservative Party for its failure to take action.
The company has had good value for money and it would be right for the Minister to tell us that he thinks the time has come for him to take action to bring this exploitation to an end. I talk of "public expense" because it is not my constituents and other Londoners whom Wandsworth Borough Council and the Social Security office are financing.

The money is going into the pockets of Mr. Freshwater and his friends. My right hon. Friend's Act has been turned into a gigantic dole, making the rich richer at the expense of the community and at the cost and humiliation of the poor. The State is now financing the Freshwater operation by finding part of the money that poor constituents have to pay.
The latest news is that Freshwater has set up its own charitable body to help those that it has exploited, with the State's connivance, to such a degree that even the company is ashamed. The robbers and thieves have turned Samaritans, but it is a bit late.
I should like to believe that the company really did not realise the consequences of its actions in terms of human misery and that, having made its pile, it is now willing to get out of the property business altogether. I am close to Wandsworth Borough Council and I know that if the company went to the council, the council would be willing to buy this block on the free market if the Minister would now allow a compulsory purchase order. But at what price? If there is reality in Freshwater's change of heart, let it sell at a reasonable price. The same applies to as many other blocks as the present property owners are prepared to sell.
What will be done? This rather bare afternoon might be an opportunity for a startling pronouncement, which would come appropriately from the Under-Secretary, who I am sure does his best within the confines of his responsibility. It would be pleasant if he could announce that a real improvement will be made and that there will be no more talk. This has been going on year after year and this announcement will reward the gentlemen of the Press who are not normally here at 4.30 p.m. on a Friday.
More is needed than just a charity action, or a further dole. Further action is needed against the property owners—against Freshwater and their like—because not all property owners have seen the light sufficiently to set up their own charity organisation, as Freshwater has done.
I doubt whether capitalism has an attractive face. I have seen only one or two glimpses of it acting beneficently. It has happened in the theatre, but it is rare. I am surprised that the Prime


Minister was astonished to discover that the face of capitalism was unattractive. I could have told him that some time ago. It has a very greedy face. The face of the property company is particularly ugly, and might give shudders to members of the Monday Club.
If the Minister decided to take action here, he would be pleasing not just Labour Members and the tenants concerned but also his own hon. Friends, who must be as concerned as we are at some of the practical consequences of the use of this Act as its authors never intended it to be used and as I should have thought the present Government would not want it to continue to be used.
I feel that the time has come for us to admit that, whatever may be said of the rôle of the landlord, the rôle of the large-scale property owners is one over which we should place a very large question mark. If they are to continue to be allowed to operate, they should not be allowed to operate on existing terms I sincerely hope that we shall hear something constructive from the hon. Gentleman.

4.10 p.m.

The Under-Secretary of State for the Environment (Mr. Reginald Eyre): I appreciate the prior notice which the hon. Member for Putney (Mr. Hugh Jenkins) gave me. The general answer to the question implied by the hon. Gentleman is that since Government policy for privately rented dwellings has been to uphold and support the fair rent system introduced by the Labour Government, the effect of the policy of this Government has been to keep privately rented dwellings under the control of the rent officer and the rent assessment committee.
Indeed, the Government have extended the fair rent system by introducing a phased programme of decontrol of those properties which have had their rents controlled since 1957, and by bringing a number of higher rateable value tenancies within the fair rent system. The introduction of rent allowances has given for the first time generous and much-needed subsidies to a very large number of private tenants. In his speech, however, the hon. Member has shown that his interest in initiating the debate has

been to talk about the operation of rent officers and rent assessment committees, and the rents which they determine, as well as the broader subject he embarked upon.
I must point out at once in the clearest possible terms that the operation of the rent officers and rent assessment committees is entirely independent of central or of local government. Once a rent officer, or member of a rent assessment panel, from among whom the members of rent assessment committees are chosen, has been appointed, he operates as an independent statutory officer whose conduct is governed by Act of Parliament. He is answerable for the legality of his decisions only to the courts. There is no scope in individual cases for an administrative review of the decision either of a rent officer or of a rent assessment committee.
Having said that, I should add with equal emphasis that the Government fully endorse the way in which rent officers and rent assessment committees carry out their duties, and reject completely any suggestion, such as those that have been made by the hon. Member, that the operation of the system is biased against tenants or that it is resulting in the registration of rents which approach market rents.
When one considers the pressure on on accommodation in London especially at the moment, and the rapid increase in property values which has taken place in the last year or two, the achievement of the rent officers and rent assessment committees operating in London in maintaining the balance of interests of landlords and tenants as they are required to do by the statutes has been considerable. They deserve our commendation rather than our criticism.

Mr. Jenkins: Would not the hon. Gentleman at least admit that if an Act intended to hold rents down has had instead the effect of vastly increasing them, there is a case for an inquiry into how the officers and the committees are carrying out their duties?

Mr. Eyre: I shall come to the very fair way in which they are carrying out their duties.
I think it would be helpful at this stage if I were to read subsections (1) and


(2) of Section 46 of the Rent Act 1968. This section sets out what is to be taken into account when a fair rent is being determined, either by a rent officer or by a rent assessment committee. It has proved a responsible and workable formulation. Subsection (1) says:
In determining for the purposes of this part of this Act what rent is or would be a fair rent under a regulated tenancy of a dwelling house, regard shall be had subject to the following provisions of this section, to all the circumstances (other than personal circumstances) and in particular to the age, character and locality of the dwelling house and to its state of repair.
Subsection (2) says:
For the purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwelling-houses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwelling-houses in the locality which are available for letting on such terms.
It is subsection (2) which excludes scarcity value from the determination of a fair rent. It is the effect of this subsection which has been questioned by the hon. Member. He has suggested that this subsection has not had the effect of keeping rents below market rent level.
I can think of two very clear and impressive pieces of evidence which make it absolutely certain that the scarcity element which is discounted in fair rent calculations is considerable. The first such piece of evidence is simply the figures for fair rents which have been registered on an application three years after the registration of an earlier fair rent, as the Statutes provide. Fair rents which were registered in these circumstances in the first three months of 1973 were on average 17 per cent. higher than those which had been registered for the same dwellings three years previously. This shows an increase of a little over 5 per cent. per year compound.
When one considers that not only property values but also landlords' costs for maintenance and decoration have risen very considerably during those same three years, it becomes perfectly clear that no great change in the pattern of these rents has taken place. Indeed, when one considers that a market rent would represent a reasonable return of the sale value of a property, it becomes clear that fair rents are representing a

much lower rate of return than they were doing three years ago. This conclusion is inescapable from the evidence.
The other piece of evidence I would cite is of a more direct kind. During the passage through Parliament of the Counter-Inflation Act, as the hon. Member will remember, the Government made an amendment the effect of which was to bring more tenancies within the scope of the fair rent system. The Government did this because they became convinced that the hardship which was being suffered by some tenants who were forced either to leave their flats and houses in London at the end of their leases or to pay market rents which—this is the important point—were generally around twice what the fair rent level for such property was likely to be, outweighed the likely adverse affects on the supply of such accommodation which would result from an extension of the Rent Act. In other words, for properties of almost identical rateable values, fair rents of around £800 to £1,000—I am referring to the higher rented tenancies—corresponded to market rents of £1,600 to £2,000.

Mr. Jenkins: If the Under-Secretary believes this to be so, he could have no objection to an examination. My information is precisely to the contrary. The facts which support my information are that whereas the rent tribunals were originally used Quite a lot by tenants, nowadays they are used almost exclusively by landlords for the purpose of getting an increase in rent.
On a point of fact, I do not recall that I supported my Government on the Bill to which the hon. Gentleman referred. Even if I did, it would be no excuse for the Under-Secretary not changing his mind.

Mr. Eyre: This evidence is publicly available and is recorded in the report of the work of the rent assessment committees. The evidence in support of everything that I am saying is available to the public.
All tenants of regulated tenancies pay the same rate if it has been set by the rent officer. Therefore, it is not true to suggest, as the hon. Gentleman said, that poor tenants are moved out and replaced by richer ones. The protection operates.
When the hon. Gentleman's right hon. Friend was introducing the Act which


is the basis of fair rents he did not make any provision at all for the rent allowances that are now there. This Government have done a great social justice in making rent allowances available in cases where tenants need help.
From what the hon. Gentleman said I believe that the tenant of the flat to which he referred is receiving a rent allowance. Under the increased needs allowance which was introduced in April I am happy to think that this old gentleman will get specially generous help. The case cited by the hon. Gentleman appears to be a decontrol case.
The hon. Gentleman referred to rents which had been paid for 20, 30 or 40 years and was sufficiently fair as to acknowledge that those are very low rents. There can be no justification for such rents being kept at the same level since 1957 as they have been in the case of controlled tenancies. That is why they are moving on to regulated tenancies.
I stress that on the basis of 1957 rent values it would be impossible to maintain these properties in good condition. It would be impossible to maintain the lift to which the hon. Gentleman referred. The only way in which these properties can be kept in order, not only for the present generation of tenants but for the benefit of those who come in the future, is to see that resources are channelled to keeping these properties maintained properly and in good order. It would be irresponsible of the Government to take any other view.
The hon. Gentleman made references to "well-known" case of bribery of rent officers. No such case has ever been proved, and I must strongly reject his allegation. The hon. Gentleman referred to tenants in a block and suggested that if the local authority took over the block there would be a change, but again the tenants would be paying fair rents which would be the same basis, for the same basis applies to tenancies in the public and the private sector. It is necessary that this should be so in order to preserve our housing stock, to see that it is available for those who come after the present line of tenants. The level of these fair rents is very carefully determined so that scarcity values are excluded.
Having rejected firmly the general allegations of abuse made by the hon.

Gentleman on such inadequate grounds. may I go on to say that the decline in the supply of rented accommodation is yet another sign that fair rents represent much less than the market rate of return on the value of privately rented property It is common knowledge that the private rented sector is declining at the rate of some 150,000 dwellings a year, to a great extent as a result of the control of rents. The Government have said that they do not feel that it is realistic to attempt to halt this decline because the gap between fair rents and market rents has now become so large. This again provides the clearest refutation for the suggestions made by the hon. Member that fair rents are now approaching market rents.
In his speech the hon. Member placed some emphasis on the way in which rent officers and rent assessment committees operate under the Act. He suggested that in some ways there might even be something amounting to a conspiracy between committee members and property owners. The House should know that each rent assessment committee consists of a lawyer, a surveyor and/or a layman, and that each committee is appointed specially to deal with a particular case. Amongst other things, this ensures that the standards applied by committees are constant throughout each panel, and that fair rent levels are consistent for the same type of property. This consistency is generally furthered by having rent assessment committees to deal with the cases in which there is an appeal against the findings of a rent officer, though rent officers themselves pay particular attention to comparable cases when they are determining fair rents, and it is very much to the point that on average rent officer and rent assessment committee determinations diverge by only some 5 per cent. in respect of the 4 per cent. of cases which go to appeal.
There have, from time to time, been allegations that unduly high rents have been registered for property belonging to a specific landlord, but the evidence of the rent register has never borne out any of these allegations. The rent register, which contains all the existing fair rents for a particular registration area is open to public inspection. I stress this fact to the hon. Gentleman. Not only would any attempt to set a particular group of rents at artificially high levels involve the


attempted corruption of a committee whose composition is unknown until the day on which it first meets if such a conspiracy had been successful, its results would have been available for all to see.
These are the reasons which lead me to rebut so strongly the allegations of the hon. Gentleman.

Mr. Jenkins: The allegations are, in fact, admitted.

Mr. Eyre: No, I must reject that suggestion.

Mr. Jenkins: I will send the evidence.

Mr. Eyre: I was going on to say that I will, of course, look at this particular case in detail and write to the hon. Gentleman about it, but on the basis of this case, he has raised such a fantasy of allegations that I must say strongly that there is no evidence in support of his allegations. That is why I have gone to some length in explaining the system which applies and the public safeguards which operate.
It has been suggested that landlords have been enabled to achieve very high rent increases because they can afford to be represented professionally at hearings before rent assessment committees whereas tenants are unable to do so. Once again, I can only say that there is no evidence to bear this out. There are obvious advantages in having a case presented professionally, not least for the committee itself, which is helped by having the evidence presented to it as clearly as possible. At the same time, I know that committees, and rent officers, too, go to great lengths to assist tenants and, indeed, landlords who are not represented professionally to present their cases as well as possible.
The hon. Member has referred to the Freshwater group of companies. It is no part of my responsibility to defend this group or its business interests, but in fairness, I can only tell the House that on no occasion have allegations of illegal or sharp practices against it been supported by evidence on investigation.
It is true also that this group of companies is almost alone in providing a large number of homes to let at fair rents —I believe, about 40,000 flats—despite the manifest fact that these rents do not provide an adequate return on the present investment value of the property. There may well be sound commercial reasons for this, but, in view of the shortage of accommodation, I suggest that it is unwise to make the sort of vague attack which has been made by the hon. Member and is only likely to encourage the selling off of the property.
The hon. Member has suggested, on the basis of an isolated case—I have said that I shall be glad to investigate it if he will let me have the details—that something is seriously wrong with the operation of the fair rent system. I must tell him that I do not consider that he has supported that general case with anything beginning to look like adequate evidence. Rent officers and the London Rent Assessment Panel are independent of the Government. They operate within the strict limitation of the Act passed by the hon. Gentleman's Government, the material part of which I have quoted. I emphasise that the results of their deliberations are recorded and are open to public scrutiny, and it follows that the system has strong safeguards for the public interest.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Four o'clock.